Home  Journals  Finance and Credit  6(390) - 2010 February

Variation of the interest rate depending on an estimation of credit status of the borrower

Available online: 12 February 2010

Subject Heading: CREDIT RISKS

JEL Classification: 

The question of regulation of risks of crediting in modern bank practice are mentioned in this article. The traditional tool on management of risks is a variation of parity the profitableness / risk, realized through selection of corresponding price parameters of crediting. The majority of banks vary the interest rate only depending on business deal parameters while the risk level substantially depends on credit status of the borrower. As a result of the analysis of existing practice of crediting the technique suggested allowing to segment borrowers on groups depending on factors influencing risk degree that allows to differentiate the interest rate for maintenance of profitableness of bank at desirable level and raises appeal of credit products.

Keywords: Private crediting, floating interest rates, credit risk, credit rating

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ISSN 2311-8709 (Online)
ISSN 2071-4688 (Print)

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