Determining customer limits by data mining methods in credit allocation process

The demand for credit is increasing constantly. Banks are looking for various methods of credit evaluation that provide the most accurate results in a shorter period in order to minimize their rising risks. This study focuses on various methods that enable the banks to increase their asset quality without market loss regarding the credit allocation process. These methods enable the automatic evaluation of loan applications in line with the sector practices, and enable determination of credit policies/strategies based on actual needs. Within the scope of this study, the relationship between the predetermined attributes and the credit limit outputs are analyzed by using a sample data set of consumer loans. Random forest (RF), sequential minimal optimization (SMO), PART, decision table (DT), J48, multilayer perceptron(MP), JRip, naïve Bayes (NB), one rule (OneR) and zero rule (ZeroR) algorithms were used in this process. As a result of this analysis, SMO, PART and random forest algorithms are the top three approaches for determining customer credit limits.

Bank Revolving Credit as a Channel of Monetary Policy Targeting Interest Rates

This paper investigates the implication of bank revolving credit in the form of credit card loans as a channel of monetary policy targeting the federal funds rate since 1980. Credit cards have become increasingly popular and a necessity for many transactions and purchases in the United States. The revolving credit nature of credit card loans makes them an instant tool for consumer loans that can facilitate consumption. Using instrumental variable and two-stage least squares (2SLS) methodology, we analyze the implication of credit card loans to modern monetary policy that targets interest rates.

Impact of the COVID-19 Pandemic on the Consumer Credit Market in V4 Countries

The aim of this article is to analyse and assess the impact of the COVID-19 pandemic on the consumer credit market in the countries of the Visegrad Group (V4, i.e., the Czech Republic, Poland, Slovakia, and Hungary). There is no doubt that the pandemic has determined the amount of household debt due to consumer credit in the V4 group, and thus the question arises of how the pandemic affects the propensity of households to take out loans and the propensity to lend to them, and therefore whether it affects both the behaviour of borrowers and lenders. The study used the time series and multiple linear regression methods. The results of the study show that the Covid-19 pandemic has determined the level of household debt in the V4 group and is not indifferent to household decisions regarding taking out consumer loans. Although the research is preliminary, it has contributed to some extent to a better understanding of household indebtedness at a time of turbulence and instability resulting from health factors in V4 countries. In the future, this research will serve as the basis for future research on the phenomenon of household indebtedness in other countries.

Impact of Legal Incentives on “Credit Fraud” Criminal Offence

Currently, the number of financial institutions has been increased in Albania, which provides Albanian citizens with access to various financial services, mainly to obtain financing services in the form of microcredit. Given the history of our people, not all the Albanian citizens have had opportunity to have access and to benefit from various financial services. Denial of financial services is an issue that has affected not only Albania, but also other small Balkan countries. The reasons for this denial are numerous, but among them, we can distinguish the lack of lending experience, as one of the common reasons for being excluded in these countries from the development of the financial sector. Taking into consideration that, the growth of financial institutions led to the growth of financial services by raising awareness and financial education of citizens. Finally, the Bank of Albania , as the supervisor of financial activities, intends to set a ceiling on the interest of consumer loans provided by non-bank financial institutions and commercial banks in Albania. This paper aims to present through a professional legal treatment all the challenges of the legal and institutional framework of the Bank of Albania, itself in undertaking this initiative. The questions we intend to answer through this paper are: Is the Bank of Albania legitimized to set a ceiling interest rate for consumer credit? What are the benefits or challenges that this initiative will bring to the financial sector? How will this regulation affect the criminal offense of "Credit Fraud"? How will the financial industry be designed after the implementation of the initiative? Will it have any impact on customer beneficial? etc.

A Study on Customer Relationship Management Practices in Indian Banks With Special Reference to Chennai City

The banking landscape has undergone a paradigm shift from welfare oriented banking to profit oriented banking over a period of three decades. The deregulation has completely transformed a very complexion of commercial banks in the early nineties. Prior to deregulation syndrome, the customers were given short shrift in the social sector banking era. The customers were made to run from pillar to post to get an ordinary personal loan. Only those who can afford to offer security were made eligible for big ticket loans. The borrowers had to wait endlessly for various types of consumer loans. The customers in the current era of liberalized environment are enjoying the privilege of choosing their banks in terms of various considerations. The main objectives of the study is to examine the current customer relation strategies adopted in Indian Banks, to identify the deficiencies in the existing customer satisfaction variables which lead to Bridge the customers and the bank, to study the difference in perception of the customers of the bank toward various services provided by bank and to analysis the satisfaction level of customer services provided by the bank. The survey reveals that assenters are satisfied in most of the aspects and they want to continue with their respective banks. So now if the banks use proper strategies to overcome the shortcomings faced by customers, the banks can easily build a strong relationship and that will allow the bank to earn profit in the competitive environment.

An Analysis of Big Data Analytics, IoT and Augmented Banking on Consumer Loan Banking Business in Germany

This research aims to analyze the particular component of industry 4.0 applying in the consumer loans banking business. Industry 4.0 comprises of a lot of technological advantages, this research selected three components of industry 4.0; Big data analytic, Internet of Things (IoT), and Augmented reality in banking. Secondary data are used to conduct this research, collected from the previous research and the academic literature. At first, this research explains why the consumer loans banking business in Europe, especially in Germany, needs to integrate Industry 4.0. secondly, this research analyzes the suitable component of industry 4.0 into the consumer loans banking business. The findings of this research deliver an essential piece of analysis to the consumer loans banking business' stakeholder with direction on implementing industry 4.0 into their business.

Evaluation of the Macro- and Micro-Economic Factors Affecting the Financial Energy of Households

This paper is an evaluation of the common macro-economic, micro-economic, and social factors affecting households’ financial situations. Moreover, the author’s objective was to develop a fuzzy logic model for forecasting fluctuations in the number of nonperforming consumer loans in a country using the example of Poland. This study represents one of the first attempts in the global literature to develop such a forecasting model based on macro-economic factors. The findings confirm the usefulness of the proposed innovative approach to forecasting the volume of household insolvencies in a country.

Definitions Establishing the Scope of Harmonization in the Field of Consumer Credits. Comparative Aspects

The sphere of consumer loans implies protection, knowledge, anticipatory regulations, flexibility, adaptability leading to the elaboration of a modern, clear legislation and an efficient internal credit market. Clear, explicit and clear legislation contributes to increasing the trust of customers, consumers and effectively to their protection. The European Directive states that: “in order to ensure consumer confidence, it is important that the market provides them with a sufficient degree of protection” [1]. In this way, the demand and supply of loans can be achieved in optimal conditions, both for professionals who offer loans and for credit consumers. A sufficient degree of protection ensures the confidence of credit consumers. In this sense, the concept of complete harmonization, from the perspective of the European Directive is seen as necessary in order to achieve a high level of interest of consumers and professionals. Legislation easily understood by the parties involved in credit agreements, does not leave room for some interpretations. For this reason, we appreciate the fact that the presentation of the definitions, the transparency in the knowledge of their meaning represent one of the important measures of protection of the customers consuming loans.

The Impact of the Crisis Triggered by the COVID-19 Pandemic and the Actions of Regulators on the Consumer Finance Market in Poland and Other European Union Countries

The economic crisis triggered by the COVID-19 outbreak has severely affected the global economy. The ultimate scale of the recession is yet to be determined, but it is likely to be the most dramatic slump since World War II. The impact of the crisis on the financial sector, especially consumer finance, could almost instantly be observed. The article shows how determination and consistency in regulatory actions counteracts the effects of the pandemic crisis for the banking sector and consumer finance. The conducted research has shown the existence of a number of social phenomena typical of this type of global crisis, such as shopping panic, reduced creditworthiness of households related to loss of income, unemployment and increased crime. At the same time, the actions of financial market regulators turned out to be very effective (no negative structural phenomena occurred in the financial market). The accuracy of the selection of instruments and the speed of action limited the social and financial effects of the pandemic, including a loan repayment memorandum, limiting the cost of consumer loans and supporting the banking sector, which will limit the scale of excessive household debt and consumer bankruptcies, and companies were also supported. The research was conducted on the basis of available literature on the subject, market analyses and a review of regulations implemented at the central level and in individual EU member states.