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Note---The Bierman-Hausman Credit Granting Model: A Note

Author

Listed:
  • Venkat Srinivasan

    (College of Business Administration, Northeastern University, Boston, Massachusetts 02115)

  • Yong H. Kim

    (College of Business Administration, University of Cincinnati, Cincinnati, Ohio 45221)

Abstract

To date, the Bierman-Hausman (Bierman, H., Jr., W. H. Hausman. 1970. The credit granting decision. Management Sci. 16 B519--B532.) model remains the most rigorous normative effort in credit granting. This note points out that the procedure suggested by Bierman and Hausman for considering the time value effect is valid only under the extremely unrealistic assumption of a firm being able to simultaneously collect its receivables and make payments to its suppliers. A simple modification is presented to incorporate more realistic cash flow timing assumptions.

Suggested Citation

  • Venkat Srinivasan & Yong H. Kim, 1987. "Note---The Bierman-Hausman Credit Granting Model: A Note," Management Science, INFORMS, vol. 33(10), pages 1361-1362, October.
    • Handle: RePEc:inm:ormnsc:v:33:y:1987:i:10:p:1361-1362
    DOI: 10.1287/mnsc.33.10.1361
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    Citations

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    Cited by:

    1. Dinh, K. & Kleimeier, S., 2006. "Credit scoring for Vietnam's retail banking market : implementation and implications for transactional versus relationship lending," Research Memorandum 012, Maastricht University, Maastricht Research School of Economics of Technology and Organization (METEOR).
    2. Glennon, Dennis & Kiefer, Nicholas M. & Larson, C. Erik & Choi, Hwan-sik, 2007. "Development and Validation of Credit-Scoring Models," Working Papers 07-12, Cornell University, Center for Analytic Economics.
    3. Karl Waldmann, 1998. "On granting credit in a random environment," Mathematical Methods of Operations Research, Springer;Gesellschaft für Operations Research (GOR);Nederlands Genootschap voor Besliskunde (NGB), vol. 47(1), pages 99-115, February.
    4. Ha-Thu Nguyen, 2014. "Default Predictors in Credit Scoring - Evidence from France’s Retail Banking Institution," EconomiX Working Papers 2014-26, University of Paris Nanterre, EconomiX.
    5. Ha Thu Nguyen, 2014. "Default Predictors in Credit Scoring - Evidence from France’s Retail Banking Institution," Working Papers hal-04141336, HAL.
    6. Dinh, Thi Huyen Thanh & Kleimeier, Stefanie, 2007. "A credit scoring model for Vietnam's retail banking market," International Review of Financial Analysis, Elsevier, vol. 16(5), pages 471-495.

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