Credit Risk Management of Property Investments through Multi-Criteria Indicators
The economic crisis of 2008 has highlighted the ineffectiveness of the banks in their disbursement of mortgages which caused the spread of Non-Performing Loans (NPLs) with underlying real estate. With the methods stated by the Basel III agreements, aimed at improving the capital requirements of bank...
Main Authors: | , , , , |
---|---|
Format: | Article |
Language: | English |
Published: |
MDPI AG
2021-06-01
|
Series: | Risks |
Subjects: | |
Online Access: | https://www.mdpi.com/2227-9091/9/6/106 |
id |
doaj-7d0ecbb4711440a1b852cef2360a0196 |
---|---|
record_format |
Article |
spelling |
doaj-7d0ecbb4711440a1b852cef2360a01962021-06-30T23:06:50ZengMDPI AGRisks2227-90912021-06-01910610610.3390/risks9060106Credit Risk Management of Property Investments through Multi-Criteria IndicatorsMarco Locurcio0Francesco Tajani1Pierluigi Morano2Debora Anelli3Benedetto Manganelli4Department of Civil, Environmental, Land, Building Engineering and Chemistry, Polytechnic University of Bari, Via Orabona 4, 70125 Bari, ItalyDepartment of Architecture and Design, Sapienza University of Rome, Via Flaminia 359, 00196 Rome, ItalyDepartment of Civil, Environmental, Land, Building Engineering and Chemistry, Polytechnic University of Bari, Via Orabona 4, 70125 Bari, ItalyDepartment of Architecture and Design, Sapienza University of Rome, Via Flaminia 359, 00196 Rome, ItalySchool of Engineering, University of Basilicata, Viale dell’Ateneo Lucano, 85100 Potenza, ItalyThe economic crisis of 2008 has highlighted the ineffectiveness of the banks in their disbursement of mortgages which caused the spread of Non-Performing Loans (NPLs) with underlying real estate. With the methods stated by the Basel III agreements, aimed at improving the capital requirements of banks and determining an adequate regulatory capital, the banks without the skills required have difficulties in applying the rigid weighting coefficients structures. The aim of the work is to identify a synthetic risk index through the participatory process, in order to support the restructuring debt operations to benefit smaller banks and small and medium-sized enterprises (SME), by analyzing the real estate credit risk. The proposed synthetic risk index aims at overcoming the complexity of Basel III methodologies through the implementation of three different multi-criteria techniques. In particular, the integration of objective financial variables with subjective expert judgments into a participatory process is not that common in the reference literature and brings its benefits for reaching more approved and shared results in the debt restructuring operations procedure. Moreover, the main findings derived by the application to a real case study have demonstrated how important it is for the credit manager to have an adequate synthetic index that could lead to the avoidance of risky scenarios where several modalities to repair the credit debt occur.https://www.mdpi.com/2227-9091/9/6/106NPLsmortgage loanrisk analysisMCDAAHPPROMETHEE |
collection |
DOAJ |
language |
English |
format |
Article |
sources |
DOAJ |
author |
Marco Locurcio Francesco Tajani Pierluigi Morano Debora Anelli Benedetto Manganelli |
spellingShingle |
Marco Locurcio Francesco Tajani Pierluigi Morano Debora Anelli Benedetto Manganelli Credit Risk Management of Property Investments through Multi-Criteria Indicators Risks NPLs mortgage loan risk analysis MCDA AHP PROMETHEE |
author_facet |
Marco Locurcio Francesco Tajani Pierluigi Morano Debora Anelli Benedetto Manganelli |
author_sort |
Marco Locurcio |
title |
Credit Risk Management of Property Investments through Multi-Criteria Indicators |
title_short |
Credit Risk Management of Property Investments through Multi-Criteria Indicators |
title_full |
Credit Risk Management of Property Investments through Multi-Criteria Indicators |
title_fullStr |
Credit Risk Management of Property Investments through Multi-Criteria Indicators |
title_full_unstemmed |
Credit Risk Management of Property Investments through Multi-Criteria Indicators |
title_sort |
credit risk management of property investments through multi-criteria indicators |
publisher |
MDPI AG |
series |
Risks |
issn |
2227-9091 |
publishDate |
2021-06-01 |
description |
The economic crisis of 2008 has highlighted the ineffectiveness of the banks in their disbursement of mortgages which caused the spread of Non-Performing Loans (NPLs) with underlying real estate. With the methods stated by the Basel III agreements, aimed at improving the capital requirements of banks and determining an adequate regulatory capital, the banks without the skills required have difficulties in applying the rigid weighting coefficients structures. The aim of the work is to identify a synthetic risk index through the participatory process, in order to support the restructuring debt operations to benefit smaller banks and small and medium-sized enterprises (SME), by analyzing the real estate credit risk. The proposed synthetic risk index aims at overcoming the complexity of Basel III methodologies through the implementation of three different multi-criteria techniques. In particular, the integration of objective financial variables with subjective expert judgments into a participatory process is not that common in the reference literature and brings its benefits for reaching more approved and shared results in the debt restructuring operations procedure. Moreover, the main findings derived by the application to a real case study have demonstrated how important it is for the credit manager to have an adequate synthetic index that could lead to the avoidance of risky scenarios where several modalities to repair the credit debt occur. |
topic |
NPLs mortgage loan risk analysis MCDA AHP PROMETHEE |
url |
https://www.mdpi.com/2227-9091/9/6/106 |
work_keys_str_mv |
AT marcolocurcio creditriskmanagementofpropertyinvestmentsthroughmulticriteriaindicators AT francescotajani creditriskmanagementofpropertyinvestmentsthroughmulticriteriaindicators AT pierluigimorano creditriskmanagementofpropertyinvestmentsthroughmulticriteriaindicators AT deboraanelli creditriskmanagementofpropertyinvestmentsthroughmulticriteriaindicators AT benedettomanganelli creditriskmanagementofpropertyinvestmentsthroughmulticriteriaindicators |
_version_ |
1721352125626187776 |