CREDIT RISK ASSESSMENT I

CREDIT RISK ASSESSMENT I

 

Tutor : Mr P.Mwangala

STATEMENT ABOUT ACADEMIC HONESTY AND INTEGRITY

 

All students, upon signing this course outline, commit themselves to abide by the policies and rules of the institution. The core activity of ABN is learning and in this respect academic honesty and integrity is very important to ensure that learning is valid, reliable and credible.

 

ABN therefore does not condone any form of academic dishonesty, including plagiarism and cheating on exams and assessments, amongst other such practices. ABN requires students to always do their own assignments and to produce their own academic work, unless given a group assignment.

 

Academic Dishonesty includes, but is not limited to:

  • Using the ideas, words, works or inventions of someone else as if it is your own work.
  • Using the direct words of someone else without quotation marks, even if it is referenced.
  • Copying from writings (books, articles, webpages, other students’ assignments, etc.), published or unpublished, without referencing.
  • Syndication of a piece of work, all or part of an assignment, by a group of students, unless the assignment was a legitimate group assignment.
  • The borrowing and use of another person’s assignment, with or without their knowledge or permission.
  • Infringing copyright, including documents copied or cut and pasted from the internet.
  • Asking someone else to prepare an assignment for you or to write or sit an assessment for you, whether this is against payment or not.
  • Re-submitting work done already for another course or programme as new work, so-called self-plagiarism.
  • Bringing notes into an examination or test venue, regardless of whether the notes were used to copy or not.
  • Receiving any outside assistance in any form or shape during an examination or test.

 

All forms of academic dishonesty are viewed as misconduct under ABN Student Rules and Regulations. Students who make themselves guilty of academic dishonesty will be brought before a Disciplinary Committee and may be suspended from studying for a certain time or may be expelled. All students who are found guilty of academic dishonesty shall have an appropriate endorsement on their academic record, which will never be erased.

 

 

 

                                                   COURSE OUTLINE    

 

 

MODULE                            :     CREDIT RISK ASSESSMENT I [CRA 1000

 

QUALIFICATION: CREDIT RESK ASSESSMENT [ NQF [Level 5]    

Year 1, Semester 2, 2020                                                      

 

Tutor                                  :               P M Mwangala

                                                               

 

                 

Module Objectives

 

This module is designed with the following key objectives in mind.

1. To acquaint students with basic concepts in  credit risk assessment and the importance of credit for all forms of business organizations

2. To develop among students the understanding of the basic credit risk assessment options and decisions available to lenders

3. To acquaint students with the various approaches to  credit assessment from the perspective of credit providers (banks )and the financial management of businesses

 4. To acquaint students with the role and importance of quantitative and qualitative factors  in credit risk assessment.

5.  Where appropriate the module will draw from the practical experiences in credit risk assessment from local and external practices.

 

Module Requirements

 A prescribed resource titled: Credit Risk Assessment 1 – ISBN 978 99912-918-1-9 ; Academy of Banking Namibia ‘s Study Guide Publication; is a requirement. The study guide is available to students on registration.

 

Other Reading Materials

 

·         Jeffrey Taylor 2000; Credit Risk; Pricing, Measurement , and Management- ISBN 978- 06910900467

·         De Sevigny , Armaud  and O Renault 2004 : The Standard and Poor’s  Guide to Measuring and Managing Credit Risks, ISBN 13978-0071417556

·         Cornet, Marcia Milton and Saunders, Anthony  (2006) : Financial Institutions Management; A Risk Management Approach ,5th Edition  ISBN 978- 0073046679

·         Internet  Web Search

·         Module Study Guide References

 

Continuous Assessment will be based on two (2) assignments submitted and marked during each semester .

Course Outline and Content

 

1.                 Credit Risk Meaning

·         Introduction

·         Assessing credit risk

·         Credit risk for lenders – consumers and business

·         Counterparty risk

·         Sovereign risk

·         Banking risks

·         Depositor’s risk

·         Borrower’s risk

2.                      Credit risk terms- basic

·         Introduction

·         Counterparty

·         Sovereign bond

·         Credit analysis

·         Consumer credit risk

·         Credit rating

·         Credit reference

 

3.                 Business loans and bank customers.

·         Introductions

·         Loan options

·         Documents for loans

·         Bank loan issues

·         Credit factors for SME loan

·         Credit agencies and business credit rating

·         Annual borrowing check list

4.                  New business loan applications

·         Introduction

·         Risk management

·         Risk management in business

·         Starting a business – check list

·         Business start up basics

  1.            Business credit environment

·         Customer credit check

·         Business plan –importance

·         Qualifying for bank loans

  1.              Bank loans- basics

·         Bank lending- process

·         Selling bank loans to investors

·         Factors for approving mortgages

·         Factor for reviewing mortgages

·         Loan factors for getting bank loan

 

  1.             Loan applications rejection

·         Factors for rejection

·         Home loans rejection

·         Commercial mortgage loan rejection

·         Personal loan rejection

·         Business loan applications- mistakes

·         Determinants of credit history

·         Effects of bad credit history

  1.             Financial statements- assessing

·         Importance of financial statements

·         Income statements/ balance sheet

·         Cash flow statement

·         Financial statements as scorecards

·         Non- financial  statement information

·         Credit provision and distribution

 

  1.          MORTGAGE APPLICATION I

 

·         Risk assessment

·         Initial interview

·         Important factors

·         Determining good credit

·         Examining real estate

·         Lender decision

·         Closing and documents for closing

·         Important legal documents

  1.            Mortgage application II

·         Approval process

·         Pre- approval and pre- qualification

·         Loan process

·         Assessing underwriting  before approval

·         Affordability of borrower

·         Credit report – importance

·         Credit grade guide

·         Denial of bank loan