Lending Decision Model for Agricultural Sector in Thailand

Loan contracts performance determines the profitability and stability of the financial institutions, and screening the loan applications is a key process in minimizing credit risk. Before making any credit decisions, credit analysis (the assessment of the financial history and financial backgrounds of the borrowers) should be completed as part of the screening process. Good borrowers with low credit risk would be granted a loan, while a high risk borrower would be denied. A good credit risk assessment assists financial institutions on loan pricing, determining the amount of credit, credit risk management, reduction of default risk and increase in debt repayment.