MAKING UNCERTAIN BUSINESS DECISIONS IN THE BANKING SECTOR

Abstract

The time in which we live today imposes new business rules that must be followed in order to survive in the market. Therefore, the essence of today’s management in all sectors, including banking, is flexibility. Clients who use the bank’s services have the following key products at their disposal: loans, guarantees and deposits. The subject of analysis in this paper will be the approval of loans to business users. Analyzing business users, banks analyze the entire spectrum of different financial indicators. This information, in the form of quantitative and qualitative data, is the basis for assessing the creditworthiness of the client in order to minimize credit risk. Based on the analysis of financial indicators and overall operations of a legal entity, a detailed report on solvency, liquidity, profitability, activities, repayment capacity of a particular client can be obtained. The main goal of the research is to show the analysis process that happens in the background when approving a loan to a business user. The paper will present banking risks as well as the types of financial indicators on the basis of which business decisions are made. On the basis of the case study method, it will be shown how and in what way banks approach the process of approving loans to business persons, which methods they use to protect themselves and to prevent the emergence of banking risk. The results of the research point to the need to use financial indicators during the loan approval process, because in this way banking risk is prevented, and subjective assessment methods cannot meet such a demanding task.