| Summary: | 碩士 === 國立中興大學 === 高階經理人碩士在職專班 === 93 === Due to the deregulation of the banking industry in Taiwan, there were sixteen new banks established since 1991. Those new banks can open five branches every year, Therefore over banking caused severe competition. As financial crisis rose in Asia in 1997, many enterprises bankrupted. This event caused the delinquent ratio in the whole banking industry to increased dramatically.
Moreover, most of the businesses moved their production lines to Mainland China for competition reason and raised their funds from equity market instead of banks. Thus, profit from corporate banking shrank and many banks changed their focus to consumer banking. Successful stories of consumer banking in Citibank and China Trust showed high profit and well-managed bad loans which attracted lots of banks to entered the market, especially cash card product in this market.
The characters of cash card are easy application, fast approval and high interest rate. Therefore banks targeted their customers on the group who is not sensitive on interest rate. So far, the market competition is overwhelmed. To increase market share, banks loosen credit requirements and simplify operation flow. Meanwhile, banks also provide second application service to increase more profit. On the other hand, if banks are not able to manage credit risk or achieve economic scale, they may face huge deficit or even withdraw from the market.
The purpose of this paper is to find which factors (variables) will cause bad loans. I combine the customers’ personal data and credit history provided by JCIC(Joint Credit Information Center), and then chose variables and tested whether these variables are significant by using Probit Model and E-View5 software. It turns out that the most significant variable is the number of times for the credit checking from JCIC. The higher the number of times for the credit checking from JCIC, the higher the probability of the customer applying for personal loans from many banks. Furthermore, female have better payment records than male. Those who are leases or live in relatives’ property have higher probability of payment delinquency. Full-time employees have higher scores of credit assessment, so they can easily grant loans from banks. But this causes high bad loans rates due to over expended credit. However, the variables for the source of applications, personal loans, and home loans are not significant.
While expending market share, banks must pay more attention to control risk and to choose customers. It is very important to educate consumers to wisely and deliberately manage their money, and to maintain good credit histories. Otherwise, the society as a whole will eventually pay the price.
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