Transformations  in
Business & Economics

DEVELOPMENT OF ENTERPRISE CREDIT RISK ASSESSMENT MODEL FOR LITHUANIAN CREDIT UNIONS
Renatas Spicas, Rasa Kanapickiene, Mindaugas Vijunas, Robertas Kirka

ABSTRACT. As credit unions expand the expert credit risk assessment methods are becoming ineffective. It becomes essential to apply quantitative risk assessment methods by employing objective analytical information. Credit unions should apply statistical credit risk assessment models to assess credit risk of potential loan recipients as accurately as possible.
However, current credit risk assessment models are usually adapted to the banking sector. Thus, the aim of this article is to form a logistic regression model of enterprise credit risk assessment for Lithuanian credit unions. Definitions of "good" and "bad" debtor are reconsidered when developing the model; financial and non-financial ratios able to best describe the probability of default are researched. Model development methodology has been improved and original logistic regression model of enterprise credit risk has been provided. 

KEYWORDS:  credit risk assessment, logistic regression, credit unions, Lithuania.

JEL classification:  G32.