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Advanced Credit Risk Analysis and Management by Ciby Joseph

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Credit Basics

Historically credit is good, if used wisely. However, there are numerous instances where both lenders (and creditors) and borrowers (or debtors) and even global economies suffer because of credit. The main reason is traceable to poor credit risk analysis and inadequate credit risk management. The purpose of this book is to delve into the realm of credit risk analysis and management in depth so that both lenders and borrowers can make the best use of credit for the common good.

Credit prudently used can create wealth and bring overall prosperity to the economy. Accordingly, credit, nowadays, is pervasive and is a common feature of all global economies. The only places from which it would be probably absent would be among the hunter/gatherer tribes in the deep jungles of Africa, South America or Asia or in similar tribes still living in primitive conditions.

Look around, observe your newspapers, magazines, television or radio or the billboards on highways – you can see invitations to participate in credit. Manufacturers of automobile and consumer durable goods offer credit directly or through their finance subsidiaries at low interest rates or offers instalment schemes with easy repayment terms. Credit card issuers attempt to persuade almost everybody to live on credit and at least some of the credit card holders find themselves living beyond their means and almost in perpetual debt.

Individuals borrow to meet their immediate requirements of physical needs such as ...

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