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1. Objective:

 Give an introduction to the concept of credit risk and analysis and the lending process
followed by banks
 Develop the ability to evaluate the principles of bank lending and their practical
application over a wide range of lending situations
 Provide the knowledge on the theories related to credit analysis and approaches in credit
analysis and financial statements analysis
 Build up skills in credit analysis in different customer segments and special types of
credits like consumer, real estate, corporate and small business loans
 Develop an understanding of the critical elements of credit management, as applied by
the lending credit grantors, including the measuring and management of credit risk and
how lending facilities are established and controlled
 Introduce the statutory and regulatory influences that condition the approach of credit
grantors as well as other bodies that contribute to the management of risk
 Explain the impact of problem loans and identify other issues pertinent to credit analysis
and lending.

2. Learning Outcome:

On completion of this unit, students should be able to:

 Outline the scope of bank lending and the principles of good lending
 Comprehend and apply principles of credit analysis and lending to assess borrowers in
real cases
 Demonstrate the capacity to discuss financial statement analysis as well as various non
financial factors that affect the creditworthiness
 Analyze data about the financial needs of businesses; using a range of techniques
including ratio and cash flow analysis in making better credit related decisions
 Explain the rationale for credit scoring models and discuss their development and
 Discuss credit risk and examine its measurement, management and control in relation to
individuals, businesses and portfolios
 Demonstrate high order knowledge in the field of consumer lending, real estate lending
and corporate and small business lending
 Discuss and evaluate the various issues/loan types/techniques/statistics pertaining to
consumer, real estate, corporate, and small business lending
 Identify problem loan management: causal factors, statistics etc., and suggest appropriate
remedial action for problem loans
 Describe the legal framework and policy that governs bank lending, and outline legal
factors that are specific to bankers.

3. Reading List

Main Text Books:

1. Sathye, M., Bartle, J., Vincent, M. &Boffey, R. (2003), Credit Analysis & Lending
Management, Wiley & Sons Australia Ltd, Sydney & Melbourne.

Additional Text:

1. Foo KokThye (2005), Principles of Lending, 1st ed., IBBM, Kuala Lumpur.
2. Colquitt, Joetta (2007), Credit Risk Management, 3rd ed., McGraw Hill, New York.
3. Gup, B. E., Avram, K., Beal, D., Lambert, R. &Kolari, J. W. (2007), Commercial
Banking The Management of Risk, Wiley & Sons Australia Ltd, Sydney & Melbourne.
4. Rose, Peter S., Sylvia C., Hudgins (2005), Bank Management & Financial Services, 6th
ed., McGraw Hill, New York.
5. Saunders A., Cornett M. M. (2006), Financial Institutions Management a Risk
Management Approach, 5th ed., McGraw Hill, New York.
6. Mays, Elizabeth (2004), Credit Scoring for Risk Managers: The Handbook for Lenders,
Thomson South-Western, Ohio.

4. Method of Assessment

No. Method of Assessment Total

1. Coursework 40%

Mid-term Test 1 (50 marks) (20%)

Group Assignment (50 marks) (20%)
2. Final Examination 60%