Credit Analysis

How solvent is a company? Is a firm’s capital structure sustainable in the long run? How does a bank determine whether to finance an entity or individual? We will try to answer these questions here.

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What Is Credit Risk? Why Is Credit Risk Important?

Let’s talk about credit risk. In general, when giving credit, a creditor, also known as a lender, provides goods

What Is Credit Risk? Why Is Credit Risk Important?

Let’s talk about credit risk. In general, when giving credit, a creditor, also known as a lender, provides goods or services to a debtor (who can be referred to as borrower), based on the trust that the borrower will repay the lender at some point in the future. In...
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Expected Loss and Its Components

It is normal for lenders to incur credit losses from every portfolio or exposure over a given period of

Expected Loss and Its Components

It is normal for lenders to incur credit losses from every portfolio or exposure over a given period of time. In other words, lenders know that there is a certain amount of credit risk associated with every borrower. They expect that there could be a loss when lending to...
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Capital Adequacy, Regulations, and the Basel II Accord

In our previous article, we talked about the 2008 financial crisis. Bankruptcies of big financial institutions lead to huge

Capital Adequacy, Regulations, and the Basel II Accord

In our previous article, we talked about the 2008 financial crisis. Bankruptcies of big financial institutions lead to huge disturbances in the economy that affected government, firms, and households. Thousands of jobs were lost along the way and millions of people experienced significant financial difficulties. In order to prevent...
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How solvent is a company? Is a firm’s capital structure sustainable in the long run? How does a bank determine whether to finance an entity or individual? We will try to answer these questions here.

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