IMPACT OF SCORING MODEL ON THE ACCURACY AND SPEED OF CREDIT RISK ASSESSMENT OF SMALL AND MEDIUM-SIZED ENTERPRISES

Abstract

In order to make a credit decision of a good quality and thus decrease the credit risk, banks have started to develop and use statistical models for evaluation of the credit risk. These models turn knowledge of experts into statistical-mathematical model, based on function derived from accounting and market variables. A classic credit analysis turned out to be insufficient for managing credit risks, so in the last 20 years new techniques have emerged. This paer researched the influence of the scoring model on adequate credit risk assessment of small and medium enterprises. The purpose of the scoring model introduction is to increase the accuracy and speed of credit risk assessment to which the bank is exposed when financing small and medium enterprises. In this way borrowing costs are reduced and the accuracy of the creditworthiness is improved.