Home  Journals  Finance and Credit  16(496) - 2012 April

The «bad» credits should be much?!

Available online: 23 April 2012

Subject Heading: Banking

JEL Classification: 

In the article it is noted that the conventional method of compensation of credit risk is increase of level of interest rate. The risk of non-return of the loan is higher, the there should be compensation of the creditor more. Exactly so the base concept of financial management about interdependence of risk and profitability is treated by banks. Insolvency of similar approach in most cases of its applications is proved. Ignorance of conditions of the "right" increase of level of percent leads to that an interest rate only becomes compensator of risk, and the factor of its increase it will be always.

Keywords: risk management, risk compensation, award for risk, credit risk, solvency

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

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