CREDIT RISK MANAGEMENT
Question
CREDIT RISK MANAGEMENT
Credit risk policy is one of the most important instruments of economic policy. Experiences from
developed countries and countries in transition show that the optimal credit risk policy is an
essential prerequisite for accelerating economic development. The effectiveness of the
mechanism in achieving this goal involves the fulfilment of certain conditions: stabilization of
prices and elimination of price disparities, coordination of movements of exchange rates,
inflation, and interest rates, etc. In countries with a diversified financial structure, achieving
these prerequisites, as well as the formation of interest rates on the balanced value is realized
through the action of the market mechanism. Given that most of these issues are present in every
country, it is necessary to identify and critically re-assess the effects of credit risk policy on
economic developments, as well as preventive measures to reduce risk. While financial
institutions have faced difficulties over the years for a multitude of reasons, the major cause of
serious banking problems continues to be directly related to credit standards for borrowers and
counterparties,...