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An Empirical Research on Bank Client Credit Assessments

Author

Listed:
  • Quan Chen

    (Zhongshan Institute, University of Electronic Science and Technology of China, Zhongshan 528400, China)

  • Sang-Bing Tsai

    (Zhongshan Institute, University of Electronic Science and Technology of China, Zhongshan 528400, China
    Economics and Management College, Civil Aviation University of China, Tianjin 300300, China, gdli@cauc.edu.cn)

  • Yuming Zhai

    (School of Economics and Management, Shanghai Institute of Technology, Shanghai 201418, China)

  • Chien-Chi Chu

    (Department of Finance, Business School, Shantou University, Shantou 515063, China
    Research Institute for Guangdong-Taiwan Business Cooperation, Shantou University, Shantou 515063, China)

  • Jie Zhou

    (College of Tourism and Service Management, Nankai University, Tianjin 300071, China)

  • Guodong Li

    (Economics and Management College, Civil Aviation University of China, Tianjin 300300, China, gdli@cauc.edu.cn)

  • Yuxiang Zheng

    (School of Economics & Management, Shanghai Maritime University, Shanghai 201306, China)

  • Jiangtao Wang

    (Zhongshan Institute, University of Electronic Science and Technology of China, Zhongshan 528400, China)

  • Li-Chung Chang

    (Zhongshan Institute, University of Electronic Science and Technology of China, Zhongshan 528400, China)

  • Chao-Feng Hsu

    (Zhongshan Institute, University of Electronic Science and Technology of China, Zhongshan 528400, China)

Abstract

Individual microcredit loans involve large quantities and small amounts and necessitate rapid approval, therefore making simple and fast application approvals rather critical. Creditors must evaluate clients’ credit status and default risk within the shortest time when determining whether to approve or decline their applications, preventing overdue responses that negatively impact bank profits and management practices, and could trigger domestic financial crises. This study investigates client credit quality criteria, focusing on the expert opinions of bank managers. The decision-making trial and evaluation laboratory method is adopted to enable a comparison and analysis of the similarities and differences in how banks evaluate their clients’ character, ability, financial capability, and collateral. Based on causality and correlations among the criteria, we also identify the core problems and key improvement criteria in the evaluation system. Through survey results of professional managers from Taiwanese banks, this study uses the DEMATEL method to compare the differences in bank evaluation methods based on the four dimensions of clients’ character, ability, pockets, and collateral, as well as the corresponding 14 criteria. In order to improve the reliability and usefulness in bank client credit risk assessment, the assessment dimensions and indicators of bank client credit risk assessment are first discussed; second, the causal relationship and degree of mutual influence between different dimensions and criteria are researched and assessed; in the end, the paper discusses how to improve the function and the benefits of bank client credit risk assessment.

Suggested Citation

  • Quan Chen & Sang-Bing Tsai & Yuming Zhai & Chien-Chi Chu & Jie Zhou & Guodong Li & Yuxiang Zheng & Jiangtao Wang & Li-Chung Chang & Chao-Feng Hsu, 2018. "An Empirical Research on Bank Client Credit Assessments," Sustainability, MDPI, vol. 10(5), pages 1-17, May.
  • Handle: RePEc:gam:jsusta:v:10:y:2018:i:5:p:1406-:d:144284
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    References listed on IDEAS

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    Cited by:

    1. Lkhagvadorj Munkhdalai & Tsendsuren Munkhdalai & Oyun-Erdene Namsrai & Jong Yun Lee & Keun Ho Ryu, 2019. "An Empirical Comparison of Machine-Learning Methods on Bank Client Credit Assessments," Sustainability, MDPI, vol. 11(3), pages 1-23, January.

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