Purpose: The study herein develops and tests a credit scoring model which can help financial institutions in assessing credit requests. Design/methodology:The empirical study has the objective of answering two questions:(1) Which ratios better discriminate the companies based on their being solvent or insolvent?and (2) What is the relative importance of these ratios? To do this, several statistical techniques with a multifactorial focus have been used (Multivariate Analysis of Variance, Linear Discriminant Analysis, Logit and Probit Models). Several samples of companies have been used in order to obtain and to test the model. Findings:Through the application of several statistical techniques, the credit scoring model has been proved to be effective in discriminating between good and bad creditors. Research limitations/implications:This study focuses on manufacturing, commercial and services companies of all sizes in Spain; Therefore, the conclusions may differ for other geographical locations.-51-Intangible Capital -http://dx.doi.org/10.3926/ic.903 Practical implications:Because credit is one of the main drivers of growth, a solid credit scoring model can help financial institutions assessing to whom to grant credit and to whom deny it. Social implications:Because of the growing importance of credit for our society and the fear of granting it due to the latest financial turmoil, a solid credit scoring model can strengthen the trust toward the financial institutions assessment's. Originality/value:There is already a stream of literature related to credit scoring. However, this paper focuses on Spanish firms and proves the results of our model based on real data.The application of the model to detect the probability of default in loans is original.
This paper develops and tests a credit scoring model focused on the supermarket and retailing industry which can help financial institutions in assessing credit requests coming from customers belonging to these industries category. The empirical study has the objective of answering two questions:(1) Which ratios better discriminate the companies based on their being solvent or insolvent?(2) What is the relative importance of these ratios?To do this, several statistical techniques with a multifactorial focus have been applied. The overall approach is the same as the one in Altman (1968), but the application of the design as well as the purpose of it are different. Through the application of several statistical techniques, the credit scoring model has been proved to be effective in assessing credit scoring applications within the supermarket and retailing industry under certain conditions. KEYWORDSCredit scoring, Supermarket and retailing industry.JEL Codes: M14, M41.
One of the prime responsibilities of the board of directors is to understand and oversee its firm's risk profile. We exploit a recent European Union (EU) regulation, the General Data Protection Regulation (GDPR), as a quasi-exogenous shock to the cyber risk landscape to assess whether boards of US firms changed their focus and governance structures to deal with this new challenge. The GDPR encompasses a sweeping set of regulations aimed at protecting EU citizens from unwanted uses of their personal Internet data. Although an EU regulation, the GDPR applies to all US public firms with at least one EU user. Adopting a difference-in-differences methodology, we use firms that already fall under a US data privacy regulation as a control group and find that boards of treated US firms, on average, increase their focus on cyber risk, add more directors with cyber/IT expertise, and more frequently assign cyber risk oversight to the board or to a board committee. In cross-sectional tests, we show that these changes are positively associated with a firm's ex ante cyber risk, but are unrelated to whether a firm had a large EU presence, suggesting a more global reaction to the GDPR. In addition, we examine some of the consequences of these board changes. We find boards that promptly responded by changing their board focus, expertise, and monitoring assignment of cyber risk around the passage of GDPR had fewer future cyberattacks/ data breaches and less related media attention. Our findings suggest that, on average, American corporate boards promptly responded to changes in the cyber risk environment in ways that reduced their firms' overall future cyber risk. Our results have implications for the efficacy and flexibility of US corporate boards to respond to unexpected changes in risk.
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