UNIT 1
Modern approaches-
Econometric Technique – involve the
modeling of probability of default.
Optimisation models – Use mathematical
programming techniques to minimise
lender error and maximise profits.
CAMPARI :
– Character - It is the sum total of human qualities
of honesty, integrity, morality etc.
– Ability – The borrower’s ability in managing
financial affairs.
– Margin – The interest margin is a reflection of the
risk involved in the lending.
– Purpose – The lender will want to verify that the
purpose is acceptable. (legal and in the
customer’s best interest.