Kharchenko V. Credit risk management: European experience and national practice

The dissertation is focused on the role of credit risk management in banking at macro- and micro levels. The study inquires into essential concepts of terms "credit risk" and "credit risk management", provides classification of types of credit risk, and defines motives and factors influencing the level of credit risk in banks. The author discloses the economic nature and role of credit risk management in the evolutionary development. The thesis provides the classification of credit risk management methods. It is also proposed to manage the credit risk at a macro level. The author modified the existing structure of credit management process through decomposition of each stage by four levels: international, national, credit portfolio of a bank and the level of separate loan. The research proves a significant relationship between the level of credit risk and quality of financial information, being provided by borrower to a bank. It was analyzed the correlation between financial information quality and effectiveness of credit risk assessment procedure. The author modified an existing analytical model of borrower's creditworthiness assessment through reduction of the influence of quantitative indicators at the resultant credit rating. The influence of quantitative indicators was reduced by adding qualitative factors into the model, such as legal risks analysis, analysis of borrower's market position and business transparency. The dissertation summarizes the European experience in improvement of financial information quality as well as financial information environment at national and international levels. The thesis contains recommendations and propositions on ways of financial information environment liberalization in Ukraine, which will enable to reduce the level of credit risks in Ukrainian banks.