Chapter One
Research Overview
1 Introduction
All over the world, the banking industry is considered one of the most important pillars of every country's economy, and due to the provision of various financial and credit services, it plays a decisive role in the development and economic growth of countries, and it can be referred to as a driving force, accelerator, balancer and organizer of the economy. A look at the history of the bank proves that, in addition to the role of money, these institutions have been responsible for financial and monetary exchanges in internal and external transactions, and since their establishment and formation, they have been both trustees of the people and facilitators of monetary exchanges, and have had a significant impact on the economy; Therefore, the development and improvement of banking activities, especially the granting of facilities along with an efficient system, will play a major role in the development and progress of the country's economy and banking industry. Granted facilities are considered among the most important and valuable assets of the bank, and a major part of banks' income can be generated through granting facilities, but the circulation of money and capital in the society exposes the financial institution to all kinds of risks, the variety of these risks and sometimes their severity is such that if the financial institution cannot control and manage them correctly, it will go to destruction and even bankruptcy. The risk in such activities, the validation of applicants for facilities and providing a suitable model for how to pay for facilities is considered one of the most basic principles of credit management in banks and financial institutions, so that the use of credit management tools, especially validation, allows banks to make more confident decisions about granting facilities. 1-2 statement of the problem It shows that investment and the level of economic development have a close relationship. That is, the countries that have an efficient model in allocating capital to different economic sectors, often enjoy economic progress and, as a result, higher social welfare. The economic pressures caused by the increase in demand for various forms of credit, along with extensive commercial competition and the efforts of banks and other financial institutions to reduce the percentage of non-repayment, have increased the importance of granting credit. But banks have always faced the challenge of how and based on which indicators to evaluate credit applicants? Traditional methods of deciding on granting credit to loan applicants, like what is done in our country now, which is based on personal judgment, will no longer be the answer. As the huge volume of bank claims speaks for this. Therefore, considering the importance of outstanding claims, what is important and has always been one of the most important challenges of financial institutions is to assess the possibility of default and non-repayment by applicants before granting facilities. to choose a group that is sure of performing their religion on time. It is possible to do this by means of a comprehensive, structured system and choosing appropriate criteria. One of the most important banking operations is attracting funds and saving and using them to finance the financial needs of various economic activities. In other words, banks are financial intermediaries between depositors and applicants for facilities, banks play a very important and sensitive role in the economic system of the society by having the majority of the society's liquidity. And they have a significant impact on the regulation of the economic relationships of the society. In conventional banking, which is several hundred years old, most of the bank facilities are given in the form of loans. The type of banking system is easy to do. In this type of banking system, the profitability of the bank will be guaranteed when the applicant for the facility and the customer of the bank act on the due date and on the basis of trust and confidence in paying loans and credit claims. The loan portfolio constitutes the major part of the bank's assets. The attracted deposits expose the bank to the default of the borrowers in relation to the payment of interest and principal at the predetermined deadlines.Therefore, checking the applicant's credit is of particular importance for making a decision on granting them a loan. Despite the introduction of the Islamic banking system and the removal of interest and the establishment of fees, we see the increase and growth of the balance of claims. As long as the necessary arrangements are made in the field of collection of overdue claims and overdue facilities in the banking system. A significant part of the lack of financial and credit resources of banks is solved. Credit risk originates from the fact that the contracting party cannot or will not fulfill its obligations. In the traditional method, the impact of this risk is measured by the Riyal cost caused by the default of the contracting party. Losses caused by credit risk may occur before the actual occurrence of default on the part of the contracting party. Therefore, credit risk can be defined as a possible loss that occurs as a result of an event. A credit event occurs when a party's ability to fulfill its obligations changes. In any dynamic economic system, the circulation of monetary resources and the correct and easy return of resources to the banking system (facilities) will cause economic prosperity and the prosperity of that country's economy. Preventing the creation of outstanding claims in granted facilities and collecting them potentially and actually increases the possibilities of creating new income. And it makes it easy to plan to generate income again. What cannot be ignored is the high percentage of outstanding bank claims. The lack of return on the bank's investments shows the weakness of the bank's performance in the provision of facilities. The lack of accurate measurement and evaluation of the customer before granting the facility causes a loan to be granted to a person who did not deserve it in terms of the type of loan and the amount. Also, the weakness of the bank's supervision in how to use the loan causes him to deviate from the set path. And use the capital in another degree. The result of which is not achieving the set goals and creating bank claims. And finally, it causes the economic loss of the society and the bankruptcy of a large number of companies and people. The current research seeks to provide a solution and a model. which can classify the indicators and parameters influencing the selection of credit applicants well and reduce the possibility of non-repayment of credit facilities.
1-3 Necessity of research
Undoubtedly, when some customers cannot repay their debt, some kind of economic failure occurs for organizations that provide loans. Therefore, the improvement in decision-making about granting credit to bank customers and credit grading is one of the issues related to credit risk management of banks. In other words, the problem of credit grading and credit allocation to credit borrowers is a problem for many decision centers. Therefore, the use of suitable models direction Allocation optimal Credit and distribution of bank credit among customers who have higher credit is very important. In a market where banks' profit margins are continuously decreasing due to the intensification of competition, the pressure to further reduce costs is always felt, credit models will create a kind of relative advantage for banks and credit institutions by predicting the losses of non-repayment of loans (Femandes, 2005). Therefore, it is not possible to define a boundary between the money market and the capital market. On the other hand, according to the economic structure of the country, capital market operations (securities and shares market) and other non-banking networks have not made significant progress, and therefore a significant share of investment is done through the banking market. Therefore, the success of banks in doing these things is of particular importance. In the usury system, after the loan is paid, the bank's relationship with the money is cut off, and the bank demands its money regardless of the type of economic activity; Therefore, by getting a sufficient guarantee, there is no need for a detailed evaluation of the customer (and if the evaluation is done, it is better to facilitate exchanges and choose customers). However, in the Islamic banking system, the bank is a partner receiving facilities in economic activities. Therefore, with regard to the ownership resources & ndash; it is very important to evaluate the client's ability to repay.
Preventing the growth of outstanding claims in granted facilities or collecting them potentially and actually, will increase the possibilities of creating new income and will provide the planning ability of these institutions in relation to the consumption of resources and earning higher income.