Design of a computerized procedure for commercial loan analysis

Abstract

Purpose of Study: The purpose of this study is a discussion of existing techniques of commercial loan analysis and to develop a computer model to assist loan officers in the evaluation of credit decisions. The intent of the model is to present an orderly and compact arrangement of the financial data used to analyze loan requests. The model uses a IBM/CPS system. This system provides the model with real time conversational inputs and outputs, combined with the speed and power of computers.

Findings and Conclusions: It was found that there is not one correct method or technique for evaluation of loan requests, but a computer model can be developed that can provide assistance to the loan officer. The model produces financial outputs to help analyze the creditworthiness of a borrower. Although the model does produce outputs that help to evaluate the repayment capability of the firm, the model does not and should not concern itself with the actual credit decision. The procedures developed provides the loan officer with the flexibility that they need to make accurate credit decisions. By computerizing financial data needed in loan decisions, the loan officer is able to spend more time on those activities at which only men are adept.