An Examination of Credit Assessment Methods in Corporate Banking: A Case Study of Access Bank Nigeria, Kano
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Background of the Study:
Credit assessment is a critical process in corporate banking that determines the creditworthiness of borrowers and influences lending decisions. Access Bank Nigeria in Kano utilizes a range of credit assessment methods, including financial statement analysis, credit scoring models, and risk evaluation frameworks, to evaluate potential borrowers. Effective credit assessment ensures that loans are extended to creditworthy clients, thereby minimizing default risk and enhancing the bank’s financial stability (Ibrahim, 2024). With the advent of digital technologies and big data analytics, traditional credit assessment methods are being supplemented by advanced predictive models that provide more accurate risk predictions. However, challenges such as data quality issues, model limitations, and rapid changes in economic conditions can affect the reliability of these assessments. This study examines the various credit assessment methods employed by Access Bank, evaluating their effectiveness in corporate banking decision-making. The research analyzes historical loan performance data, customer credit profiles, and risk management practices to determine the strengths and weaknesses of current credit assessment techniques, providing recommendations for improvement (Okafor, 2023).
Statement of the Problem:
Access Bank faces challenges in ensuring that its credit assessment methods accurately predict borrower risk. Inconsistencies in data quality, model limitations, and external economic volatility can lead to inaccurate risk evaluations, resulting in higher non-performing loans and reduced profitability. These issues highlight the need for a more robust and adaptive credit assessment framework that can keep pace with changing market conditions.
Objectives of the Study:
• To evaluate the effectiveness of current credit assessment methods at Access Bank in corporate banking.
• To identify limitations in data quality and risk evaluation models.
• To recommend improvements for enhancing the accuracy of credit assessments.
Research Questions:
• How effective are the existing credit assessment methods at Access Bank?
• What challenges affect the accuracy of credit evaluations?
• What measures can improve the reliability of credit assessment in corporate banking?
Research Hypotheses:
• H₁: Advanced credit assessment methods significantly reduce the incidence of non-performing loans.
• H₂: Data quality issues and model limitations negatively impact credit evaluation accuracy.
• H₃: Integration of big data analytics enhances the effectiveness of credit assessments.
Scope and Limitations of the Study:
This study focuses on Access Bank’s corporate banking operations in Kano, utilizing internal loan data, credit evaluation reports, and risk management analyses. Limitations include the variability of economic conditions and potential data reporting constraints.
Definitions of Terms:
• Credit Assessment Methods: Techniques used to evaluate the creditworthiness of borrowers.
• Corporate Banking: Financial services provided to business and corporate clients.
• Non-Performing Loans: Loans that are in default or not being repaid as scheduled.
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