PPT Slide
The credit decision is left to a leading officer, relying on her expertise,
subjective judgement and weighting of certain key factors.
1. Character - reputation of the firm
2. Capital - equity distribution of owners
3. Capacity - volatility of borrower’s earnings
4. Collateral - size and priority
5. Cycle (or economic) conditions - cycle dependend industries
Difficulties in maintaining consistency and subjectivity.