MANAGING CREDIT RISK IN BANK

Credit risk management is the fundament of successful banking business.

Credit risk determination methodology is in the centre of credit analysis, but the basic idea of credit policy is minimization and determination of sustainable border of credit risk.

One of the essential requests in a bank is capability to cover resulting losses on the basis of provided loans. Based on this, credit risk can be considered very broadly and linked to all sorts of loans. Credit risks have always accompanied banking activities, their influence has rapidly grown following increased loss borders due to insolvency or legally punishable actions of debtors, as well as because of macroeconomic instability, inflation and change of interest rates.

Growing volume of business, internationalizaton of financial circulation and globalization in banking have enlarged the border of risk and loss.

The aim is to control exposure to risk adequately and to track all possible worsening as well to undertake preventive measures to avoid unfavourable situations.

Key words: credit, risk, bank, managing, measuring

JEL Clasifikacion: E32