Credit risk mitigation that can be applied by commercial banks in assessing the lending decision /credit risk when advances and equity investments are considered for BEE classified companies. / A research report presented to the Graduate School of Business Leadership, University of South Africa / The previous political dispensation limited black people’s participation in the South African economy. Poor credit records, lack of training, resulting in skills and capacity gaps further limited entry into the lending market. These aspects are considered the main limitations in obtaining finance for the Small, Medium and Micro Enterprises (SMMEs). This research report focuses on how credit risk can be mitigated by commercial banks in lending to Black Economic Empowerment (BEE) companies in the medium to large market. Exploratory research was conducted using various methods to achieve methodological triangulation. These methods consisted of a literature review, interviewing experts in the field and case studies. A qualitative research approach was followed. It was found that the lack of own contribution and security were still prevalent in the medium to large market, but the quality of management (little training and skills) was deemed not to be a limitation as suitable credit risk mitigants were identified. No credit risk mitigants were identified to mitigate poor credit records. It is postulated that by adopting and applying the identified credit risk mitigants, commercial banks can increase their success rate in lending to BEE companies. It will further assist in the transformation of black people and compliance with the Financial Services Charter. It is recommended that a similar study be conducted in the agriculture, hunting, forestry and fishing industry. The reasons why BEE companies applications are declined could also be investigated. Further studies could also explore other external factors such as economical, legal and social that could have an influence on the funding of BEE companies.

Nesta tese investigaremos se os bancos, em geral, e se os empréstimos bancários, em particular, desempenham alguma função especial na economia brasileira, especificamente, no que se refere em explicar a performance da atividade produtiva. Procuramos averiguar as evidências teóricas e empíricas que visam desvendar a relevância do canal do crédito, em especial, do canal do empréstimo bancário, enquanto um canal adicional para a transmissão da política monetária. Isso é feito levando em conta o ambiente institucional em que a economia brasileira está inserida, cujo caráter específico, supõem-se de grande relevância para o melhor entendimento das reais condições apresentadas pelo mercado financeiro e, em especial, pelo mercado de crédito. A hipótese central considerada é que, além do impacto promovido pelo tradicional canal da taxa de juros (custo do capital) - através do efeito que exerce sobre as obrigações (depósitos) dos intermediários financeiros e sobre as decisões de investimento dos agentes - a política monetária afeta a atividade econômica através do mercado de crédito, em especial, através do canal do empréstimo bancário, devido ao efeito que exerce sobre a composição dos ativos das instituições financeiras, em particular, sobre as decisões dos bancos em relação ao volume e as condições em que os empréstimos serão ofertados. Considera-se ainda que, o sistema legal do país constitui a base para a formação de sua estrutura financeira e, por conseguinte, contribui para explicar o grau de desenvolvimento do mercado de crédito, bem como, a intensidade com que o canal do crédito responde aos choques de política monetária. Utilizando-se, como instrumento para a análise empírica, da metodologia de vetor auto-regressivo (VAR) constata-se que, os resultados observados estão em sintonia com a teoria do “canal do crédito”, a qual sugere que fricções informacionais no mercado são agravadas em períodos de restrição monetária, resultando em queda na oferta de crédito e aumento no prêmio de financiamento externo (spreads), o que contribui para potencializar a ação da política monetária sobre o produto e sobre os preços. Além disso, corroboram com os argumentos levantados pela literatura de “law and finance”, segundo a qual, aspectos institucionais, relacionados a baixa proteção do direito dos investidores, (associados às deficiências nas regras legais e à ineficiência na execução dessas regras), contribuem para intensificar as fricções informacionais no mercado de crédito e de capitais. / In this research we investigated if the banks, in particular, if the bank loans, carry out some special function in the Brazilian economy, specifically, to explain the performance of the productive activity. We tried to discover the theoretical and empirical evidences that seek to expose the relevance of the credit channel, especially, of the bank loan channel, while an additional channel for the transmission of monetary policy. Taking into account the institutional atmosphere in that the Brazilian economy is inserted, whose specific character is supposed relevant for understanding of the real conditions of the financial market and, especially, of the credit market. The central hypothesis is that, besides the impact caused by the traditional channel of the interest rate (cost of capital) - through the effect that it is done over the obligations (deposits) of the financial intermediaries and over the decisions of the agents' investment - the monetary politics affects the economical activity through the credit market, especially, through the channel of the bank loan, due to the effect that it exercises on the composition of the assets of the financial institutions, in particular, about the decisions of the banks in relation to the volume and the conditions the loans will be offered. The legal system of the country constitutes the basis for the formation of its financial structure and, consequently, it contributes to explain the degree of development of the credit market as well as the intensity with which the channel of credit responds to shocks on monetary policy. As instrument for the empirical investigation, the VAR analysis demonstrated that results are in syntony with the theory of the "credit channel". This theory suggests that informational frictions in the market are worsened in periods of monetary restriction, resulting in fall in the credit supply and increase in the premium of external financing (spreads). This contributes to accelerate the action of the monetary policy on output and prices. In addition, they corroborate the arguments from the literature of "law and finance", which suggests that institutional aspects, related to the low protection of the investors' rights (associated to the deficiencies in the legal rules and to the inefficiency in the execution of those rules), contribute to intensify the informational frictions in the credit and capital market.

A assimetria informacional é característica inerente ao mercado financeiro, transparecendo através de problemas de seleção adversa e risco moral. Não é diferente no tocante às operações de crédito bancário. Cientes disso, as instituições bancárias lançam mão de mecanismos de filtragem e monitoramento, bem como da exigência de garantias, para a redução da assimetria informativa. O contrato ocupa papel central nesse processo. Porque é do instrumento contratual a função de mitigar os efeitos deletérios da assimetria informacional, o presente trabalho objetiva avaliar se as cláusulas em contratos usuais de concessão de crédito pelo Banco Regional de Desenvolvimento do Extremo Sul (BRDE) são de fato desenhadas visando ao incentivo de publicidade de informações e prevenção de ações ocultas. / Informational asymmetry is an inherent characteristic of the financial market that presents itself as problems of adverse selection and moral hazard. It is not different in regard to bank loan operations. Aware of this situation, the banking institutions utilise screening and monitoring mechanisms, as well as collateral exigencies, in order to reduce the informational asymmetry. The contract plays a central role within this process. Because the contractual instrument has the purpose of mitigating the deleterious effects of the informational asymmetry, the present work intends to evaluate if the clauses employed in usual credit concession contracts by the Regional Development Bank of the Far South (BRDE) are indeed designed aiming at incentives to information disclosure and prevention of hidden actions.

Nesta tese investigaremos se os bancos, em geral, e se os empréstimos bancários, em particular, desempenham alguma função especial na economia brasileira, especificamente, no que se refere em explicar a performance da atividade produtiva. Procuramos averiguar as evidências teóricas e empíricas que visam desvendar a relevância do canal do crédito, em especial, do canal do empréstimo bancário, enquanto um canal adicional para a transmissão da política monetária. Isso é feito levando em conta o ambiente institucional em que a economia brasileira está inserida, cujo caráter específico, supõem-se de grande relevância para o melhor entendimento das reais condições apresentadas pelo mercado financeiro e, em especial, pelo mercado de crédito. A hipótese central considerada é que, além do impacto promovido pelo tradicional canal da taxa de juros (custo do capital) - através do efeito que exerce sobre as obrigações (depósitos) dos intermediários financeiros e sobre as decisões de investimento dos agentes - a política monetária afeta a atividade econômica através do mercado de crédito, em especial, através do canal do empréstimo bancário, devido ao efeito que exerce sobre a composição dos ativos das instituições financeiras, em particular, sobre as decisões dos bancos em relação ao volume e as condições em que os empréstimos serão ofertados. Considera-se ainda que, o sistema legal do país constitui a base para a formação de sua estrutura financeira e, por conseguinte, contribui para explicar o grau de desenvolvimento do mercado de crédito, bem como, a intensidade com que o canal do crédito responde aos choques de política monetária. Utilizando-se, como instrumento para a análise empírica, da metodologia de vetor auto-regressivo (VAR) constata-se que, os resultados observados estão em sintonia com a teoria do “canal do crédito”, a qual sugere que fricções informacionais no mercado são agravadas em períodos de restrição monetária, resultando em queda na oferta de crédito e aumento no prêmio de financiamento externo (spreads), o que contribui para potencializar a ação da política monetária sobre o produto e sobre os preços. Além disso, corroboram com os argumentos levantados pela literatura de “law and finance”, segundo a qual, aspectos institucionais, relacionados a baixa proteção do direito dos investidores, (associados às deficiências nas regras legais e à ineficiência na execução dessas regras), contribuem para intensificar as fricções informacionais no mercado de crédito e de capitais. / In this research we investigated if the banks, in particular, if the bank loans, carry out some special function in the Brazilian economy, specifically, to explain the performance of the productive activity. We tried to discover the theoretical and empirical evidences that seek to expose the relevance of the credit channel, especially, of the bank loan channel, while an additional channel for the transmission of monetary policy. Taking into account the institutional atmosphere in that the Brazilian economy is inserted, whose specific character is supposed relevant for understanding of the real conditions of the financial market and, especially, of the credit market. The central hypothesis is that, besides the impact caused by the traditional channel of the interest rate (cost of capital) - through the effect that it is done over the obligations (deposits) of the financial intermediaries and over the decisions of the agents' investment - the monetary politics affects the economical activity through the credit market, especially, through the channel of the bank loan, due to the effect that it exercises on the composition of the assets of the financial institutions, in particular, about the decisions of the banks in relation to the volume and the conditions the loans will be offered. The legal system of the country constitutes the basis for the formation of its financial structure and, consequently, it contributes to explain the degree of development of the credit market as well as the intensity with which the channel of credit responds to shocks on monetary policy. As instrument for the empirical investigation, the VAR analysis demonstrated that results are in syntony with the theory of the "credit channel". This theory suggests that informational frictions in the market are worsened in periods of monetary restriction, resulting in fall in the credit supply and increase in the premium of external financing (spreads). This contributes to accelerate the action of the monetary policy on output and prices. In addition, they corroborate the arguments from the literature of "law and finance", which suggests that institutional aspects, related to the low protection of the investors' rights (associated to the deficiencies in the legal rules and to the inefficiency in the execution of those rules), contribute to intensify the informational frictions in the credit and capital market.

A assimetria informacional é característica inerente ao mercado financeiro, transparecendo através de problemas de seleção adversa e risco moral. Não é diferente no tocante às operações de crédito bancário. Cientes disso, as instituições bancárias lançam mão de mecanismos de filtragem e monitoramento, bem como da exigência de garantias, para a redução da assimetria informativa. O contrato ocupa papel central nesse processo. Porque é do instrumento contratual a função de mitigar os efeitos deletérios da assimetria informacional, o presente trabalho objetiva avaliar se as cláusulas em contratos usuais de concessão de crédito pelo Banco Regional de Desenvolvimento do Extremo Sul (BRDE) são de fato desenhadas visando ao incentivo de publicidade de informações e prevenção de ações ocultas. / Informational asymmetry is an inherent characteristic of the financial market that presents itself as problems of adverse selection and moral hazard. It is not different in regard to bank loan operations. Aware of this situation, the banking institutions utilise screening and monitoring mechanisms, as well as collateral exigencies, in order to reduce the informational asymmetry. The contract plays a central role within this process. Because the contractual instrument has the purpose of mitigating the deleterious effects of the informational asymmetry, the present work intends to evaluate if the clauses employed in usual credit concession contracts by the Regional Development Bank of the Far South (BRDE) are indeed designed aiming at incentives to information disclosure and prevention of hidden actions.

Este trabalho tem por objetivo verificar se existe convergÃncia no mercado de crÃdito bancÃrio brasileiro nas modalidades cheque especial e crÃdito pessoal entre os bancos pertencentes ao setor pÃblico e os bancos pertencentes ao setor privado. Para se chegar aos resultados utilizaram-se as taxas de juros coletadas no sÃtio do Banco Central, na internet, no perÃodo de fevereiro de 2009 a dezembro de 2010. Utilizaram-se, tambÃm, cÃlculos estatÃsticos e economÃtricos atravÃs da observaÃÃo e verificaÃÃo da existÃncia de raiz unitÃria pelos testes ADF e KPSS nas sÃries formadas pela razÃo das taxas de juros dos bancos pÃblicos X bancos privados para testar a convergÃncia entre as taxas dos dois setores. Espera-se colaborar com uma visÃo que dà sustentaÃÃo, ou nÃo, à tese de que o governo federal possa utilizar-se dos bancos pÃblicos para influenciar as taxas de juros praticadas no mercado de crÃdito bancÃrio brasileiro. Encontramos, nos resultados, indicativos de convergÃncia de parte dos bancos do setor privado e de divergÃncia de outra parte. Ressalte-se que os resultados foram diferenciados para as duas modalidades estudadas. / This study aims to verify whether there is convergence in the Brazilian banking credit market between the arrangements for overdraft and personal loans from banks in the public sector and those banks belonging to the private sector. To reach these results interest rates were collected from the Central Bank website on the Internet from February 2009 to December 2010. Statistical and econometric calculations were used through the observation and verification of ADF and KPSS Unit Root Tests for the series formed by the ratio of the interest rates of banks in the public and private sectors. It is hoped to collaborate with a view which does or does not support the thesis that the federal government can use public banks to regulate interest rates in the Brazilian banking credit market. The results indicate a convergence on the part of the private banks and a divergence by the public ones. It was noteworthy that the results were differentiated in the two modalities studied.

The real estate industry is a sector where the companies generally have a capital structure which is high leveraged. The financing – with the related terms – is therefore specifically of high importance for the companies in the sector. Traditionally, the way of obtain financing is by borrowing from the bank. Lately, due to new bank regulations, the banks have become more restrictive in their lending which have lead to a growth of other financing alternatives. For instance, the corporate bond market has grown rapidly. The development has increased the number who acts as lenders. Institutional investors are for an example an actor which invests in corporate bonds. Furthermore, the credit rating agencies plays indirectly an important role in the financing process since their credit ratings are a part in the process of determining the terms. The terms (such as the interest rate) of the financing are mainly based on the credit risk of the company. Since the topic is of big importance and the financing for real estate companies is changing, the main focus is to create further knowledge and understanding regarding the assessments of the credit risk by each actor.  The present thesis shows the credit risk assessment process by each actor where the banks and the credit rating agencies have the most clear framework. The banks and the agencies do a deep assessment which then is discussed in "committees" internally to reach the final assessment.  The investor’s combines own analyses with evaluating earlier credit analysis done by a credit rating agency or a financial advisor in a corporate bond issue.

Thesis submitted in fulfillment of the requirements for the degree of Master of Management in Finance & Investment In the Faculty of Commerce and Law Management Wits Business School at the University of the Witwatersrand, 2015 / Risk based pricing has been a topic of discussion since the 2008 financial crisis as a result of the on-selling of packaged sub-prime assets. This paper will highlight the importance of correctly assessing risk within the framework of consumer credit provision. We will begin with a brief overview of the South African unsecured lending market, look into the definition of risk based pricing and the impact it has had in the market and conclude the paper by using a model by Robert Phillips to calculate the interest rate to be offered to a customer. / AC2016

En el país, sobre todo en la ciudad de Chiclayo, las entidades bancarias realizan diversas transacciones que benefician a la población, una de ellas es el préstamo. Estas entidades, especificando el Banco Azteca, ha realizado diversos préstamos beneficiando a la población ya sea con negocios, empresas y otras deudas previa evaluación. Sin embargo, así como hay personas que cumplen en devolver el dinero prestado, existen otras personas que no lo realizan quedándose con el dinero por diversos factores ocasionando que estos automáticamente pasen al Sistema de Deudores. Este factor, en varias oportunidades no se ha tomado en cuenta, generando deudas en el Banco. Ante la mencionada situación, la presente tesis tuvo como objetivo general implementar una aplicación móvil utilizando el algoritmo de redes neuronales para la detección de clientes en las listas priorizadas en el Sistema del Banco Azteca identificando las listas de alto riesgo y validando el sistema de detección según la ISO 25010 teniendo en cuenta que el modelo se detectará en base a los datos obtenidos y según su historial generando un nivel de información registrada de los clientes. Los resultados obtenidos permitirán detectar con mayor precisión la morosidad de los clientes. Además, los empleados de la entidad podrán monitorear a sus clientes y realizar una simulación para determinar si el cliente puede llegar a ser moroso a futuro. / In the country, especially in the city of Chiclayo, banking entities carry out various transactions that benefit the population, one of them is the loan. These entities, specifying Banco Azteca, have made various loans benefiting the population either with businesses, companies and other debts after evaluation. However, just as there are people who comply with repaying the borrowed money, there are other people who do not do so, keeping the money for various factors, causing them to automatically go to the Debtors System. This factor, on several occasions, has not been taken into account, generating debts in the Bank. Given the aforementioned situation, the present thesis had the general objective of implementing a mobile application using the neural network algorithm for the detection of clients in the prioritized lists in the Banco Azteca System, identifying high-risk lists and validating the detection system according to ISO 25010, taking into account that the model will be detected based on the data obtained and according to its history, generating a level of registered information from the clients. The results obtained will make it possible to more accurately detect customer delinquency. In addition, the entity's employees will be able to monitor their clients and carry out a simulation to determine if the client may become delinquent in the future.

Thesis (MDF)--Stellenbosch University, 2013. / This study examines the default rate and performance of Microfinance bank (MFBs) loans to Small and Medium Enterprises (SMEs) in Nigeria based on the case study of Accion Microfinance Bank Limited (AMFB), Lagos State. Responses from 150 employees of AMFB revealed that the causes of default rate and performance of SMEs reflect the risk and vulnerability of the SME sector in Nigeria. It further showed that MFBs apply stringent credit criteria in granting loans to SME borrowers, coupled with the existing high cost of funds. The attitude, lack of transparency on the part of SME owners and fund diversion were identified as major factors responsible for the high default rate among SME borrowers. These and other factors warrant the need for further study in the areas of the impact of MFB loans on SME development given the new revised microfinance policy framework in Nigeria.