A methodological approach to development and optimization a set of parameters for a company’s creditworthiness evaluating

Economic Annals-ХХI: Volume 143, Issue 7-8(2), Pages: 52-55

Citation information:
Dmytryshyn, L., & Blahun, I. (2014). A methodological approach to development and optimization a set of parameters for a company’s creditworthiness evaluating. Economic Annals-XXI, 7-8(2), 52-55. https://ea21journal.world/index.php/ea-v143-13/

Lesia Dmytryshyn
D.Sc. (Economics),
Professor,
Department of Economic Cybernetics,
Vasyl Stefanyk Precarpathian National University
59 Shevchenko Str., Ivano-Frankivsk, 76018, Ukraine
dmytryshyn_l@hotmail.com

Ivan Blahun
PhD Student,
Department of Economic Cybernetics,
Vasyl Stefanyk Precarpathian National University
59 Shevchenko Str., Ivano-Frankivsk, 76018, Ukraine
blagun@email.ua

A methodological approach to development and optimization a set of parameters for a company’s creditworthiness evaluating

Abstract. Under the conditions of market economy during a period of financial instability, it is becoming particularly significant to be able to provide an objective analysis of the financial condition of domestic enterprises and evaluate their creditworthiness. Such an analysis is essential for the effectiveness of crediting activity in general.

Nowadays, the banks of Ukraine use a wide variety of creditworthiness evaluation methods which differ in terms of the number of parameters on the borrower’s overall credit rating scale, indicative approaches and a priority given to each of them. If the set of parameters remained universal for all banks and countries, it would be possible to exchange statistics and systematize information on a global scale. However, the fact is that there is no uniformity in the system of parameters across countries, banks or researchers.

Proceeding from the topicality of the issues regarding the selection of a creditworthiness evaluation method, it is important to develop and optimize a set of parameters for analyzing the financial condition of a business entity, which is the goal of this research.

The basic principle of optimizing the selection of financial parameters is to avoid the duplication of information about a certain aspect of financial condition. As a rule, the correlation and regression analysis within the framework of econometric modeling is used with a view to identifying dependence among parameters.

The authors propose complementing the current econometric analysis of a set of parameters with the following methods: the Hellwig non-parametric method; the methods of systematizing parameters on the basis of a dendrite building; the hierarchical agglomerative methods; the method of principal components on the basis of factor analysis. A comparative analysis of the latter two methods as well as contrasting them with the discriminate analysis can optimize the parameters under analysis and provide a comprehensive picture of the financial and economic condition of the bank’s customer in terms of various parameters such as liquidity, financial stability, business activeness, cost efficiency, and other supplementary characteristics.

Keywords: Banking; Creditworthiness; Discriminate Function; Financial and Economic Condition; Statistical Methods

JEL Classification: G22; E51; C14; C18; C61

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Received 31.05.2014