Credit Risk Models for Managing Bank’s Agricultural Loan Portfolio
AbstractIn this paper, we have developed a credit scoring model for agricultural loan portfolio of a large Public Sector Bank in India and suggest how such model would help the Bank to mitigate risk in Agricultural lending. The logistic model developed in this study reflects major risk characteristics of Indian agricultural sector, loans and borrowers and designed to be consistent with Basel II, including consideration given to forecasting accuracy and model applicability. In this study, we have shown how agricultural exposures are typically can be managed on a portfolio basis which will not only enable the bank to diversify the risk and optimize the profit in the business, but also will strengthen banker-borrower relationship and enables the bank to expand its reach to farmers because of transparency in loan decision making process.
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Bibliographic InfoPaper provided by University Library of Munich, Germany in its series MPRA Paper with number 5358.
Date of creation: 12 Oct 2007
Date of revision:
Credit Risk Modelling; Lending; Agriculture;
Other versions of this item:
- Bandyopadhyay, Arindam, 2007. "Credit Risk Models for Managing Bank’s Agricultural Loan Portfolio," MPRA Paper 5357, University Library of Munich, Germany.
- G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
- C53 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Forecasting and Prediction Models; Simulation Methods
- Q14 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agricultural Finance
This paper has been announced in the following NEP Reports:
- NEP-AGR-2007-10-20 (Agricultural Economics)
- NEP-ALL-2007-10-20 (All new papers)
- NEP-BAN-2007-10-20 (Banking)
- NEP-CWA-2007-10-20 (Central & Western Asia)
- NEP-RMG-2007-10-20 (Risk Management)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Bliss, Robert, 2002. "Comments on "Credit ratings and the BIS capital adequacy reform agenda"," Journal of Banking & Finance, Elsevier, Elsevier, vol. 26(5), pages 923-928, May.
- Ani L. Katchova & Peter J. Barry, 2005. "Credit Risk Models and Agricultural Lending," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, Agricultural and Applied Economics Association, vol. 87(1), pages 194-205.
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