Nowadays companies are required to get funds for their operation and sustainability, in order to achieve this, they get credit lines. These is a very important field of study in finance and one which has to be applied perfectly well in order for companies to fucntion in a proper way. Banks and financial institutions grant loans and credit lines for different types of investments, and the way they decide is by making a study of the operation and of how much credit risk does the company has, these means what probability has the company to pay back the bank. In a recent study americans showed that they where less probably to pay their credits, these is because they have no funds to pay the banks, and some others say that they are confident that in a period of time they will be able to pay them as the income starts to flow. Here the question is, are banks doing a good job giving or denying credit lines?, are the financial and industrial investments safe for the bank and other financial institutions?, and if the clients are using the credit line in a useful way?.
Giving credit lines to companies is a great deal of work and a very interesting one, while working at CONDUSEF I learned about these subject and what are the implications for both the clients and the banks. The banks consider the creditworthiness of the user, which is the whole body of study, and if it results profitable for the institution (we know that in recession, credit lines are more difficult to get because of the interest rates), secondly they study the operation and they will get the credit risk that they want. They also study the profitability , the history, how well is the company positioned and how well is the industrial sector doing in the economy. .
There are different kinds of risks, these include risk as an operation, banks offer several credits, such as blank credits, which are extremely high risked because they have no control and they don't know of the profitable condition of the operation.
