Credit risk in Belarusian banks and ways to minimize it

Abstract

In the process of carrying out active credit operations with the aim of making a profit, banks face credit risk – the risk of non-payment of the amount of the principal debt and interest by the borrower. This problem is also relevant for commercial banks of the Republic of Belarus. Each type of credit transaction has its own reasons and factors that determine the degree of credit risk. In particular, the reasons may be the deterioration of the financial situation of the borrower, the emergence of unforeseen complications in his plans, uninsured collateral, the lack of the necessary organizational skills or experience of the manager, etc. These and many other factors are taken into account by bank employees when assessing the creditworthiness of an enterprise. By using some methods, you can reduce your credit risk. These include determining creditworthiness, self-insurance, collateral security, reduction of the loan term, diversification and setting limits. The aim of the study is to determine what credit risk is and how it can be caused, as well as revealing the ways of management and minimizing it used in Belarus