Portal de Periódicos da CAPES

The role of non-financial factors in internal credit ratings

2004; Elsevier BV; Volume: 29; Issue: 2 Linguagem: Inglês

10.1016/j.jbankfin.2004.05.017

1872-6372

Jens Grunert, Lars Nordén, Martin Weber,

Financial Distress and Bankruptcy Prediction

Internal credit ratings are expected to gain in importance because of their potential use for determining regulatory capital adequacy and banks' increasing focus on the risk–return profile in commercial lending. Whereas the eligibility of financial factors as inputs for internal credit ratings is widely accepted, the role of non-financial factors remains ambiguous. Analyzing credit file data from four major German banks, we find evidence that the combined use of financial and non-financial factors leads to a more accurate prediction of future default events than the single use of each of these factors.