Decision analysis on upper and lower bounds of optimal loan qualities for financial institution

Decision analysis on upper and lower bounds of optimal loan qualities for financial institution

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Article ID: iaor20082602
Country: India
Volume: 28
Issue: 1
Start Page Number: 111
End Page Number: 128
Publication Date: Jan 2007
Journal: Journal of Information & Optimization Sciences
Authors: ,
Keywords: Loans
Abstract:

This study designs optimal loan quality models for a two-period loan market. Specifically, this work explores whether enterprise and individual provide the guarantees for loan credit and whether financial institution repackages the rights of the loan creditor to issue financial asset securitization products to assess the upper (maximum net loan profit) and lower (specific net loan profit) bounds of optimal loan quality. This proposed model can facilitate optimal decision making regarding loan qualities based on financial institution operating performance.

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