Revistes Catalanes amb Accés Obert (RACO)

Credit Concession through credit scoring: Analysis and application proposal

Oriol Amat, Raffaele Manini, Marcos Antón Renart


Purpose: The study herein develops and tests a credit scoring model which can help financial
institutions in assessing credit requests.
Design/methodology: The empirical study has the objective of answering two questions:
(1) Which ratios better discriminate the companies based on their being solvent or insolvent?
and (2) What is the relative importance of these ratios? To do this, several statistical techniques
with a multifactorial focus have been used (Multivariate Analysis of Variance, Linear
Discriminant Analysis, Logit and Probit Models). Several samples of companies have been used
in order to obtain and to test the model.
Findings: Through the application of several statistical techniques, the credit scoring model
has been proved to be effective in discriminating between good and bad creditors.
Research limitations/implications: This study focuses on manufacturing, commercial and
services companies of all sizes in Spain; Therefore, the conclusions may differ for other
geographical locations.

Practical implications: Because credit is one of the main drivers of growth, a solid credit
scoring model can help financial institutions assessing to whom to grant credit and to whom
deny it.
Social implications: Because of the growing importance of credit for our society and the fear
of granting it due to the latest financial turmoil, a solid credit scoring model can strengthen the
trust toward the financial institutions assessment’s.
Originality/value: There is already a stream of literature related to credit scoring. However,
this paper focuses on Spanish firms and proves the results of our model based on real data.
The application of the model to detect the probability of default in loans is original.

Text complet: Text complet