engleski

The usefulness of accounting information in credit risk management in the banks

In accordance with the nature of their business, banks are exposed to many risks. The most important and dominant is the credit risk, due to its potentially significant impact. For successful banking is crucial the understanding of the credit risk, its assessment and measurement, as well as maintaining its exposure within acceptable limits. This paper elaborates on theoretical and practical understanding of credit risk in banking. The key activity of credit risk management is the initial assessment of the credit risk, which is done in the underwriting process. So, the paper investigates the usefulness of accounting information and financial statements of the borrower in the process of assessment of its creditworthiness. A high quality assessment of creditworthiness of the borrower has a positive effect on the process of the credit risk management and, accordingly, on the profit of banks.

accounting information; credit risk management; bank

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