Classification of retail banking lending

Authors

DOI:

https://doi.org/10.21847/1728-9343.2014.6(132).29528

Keywords:

retail lending, retail credit, consumer credit, retail credit product, classification

Abstract

Competition in retail banking lending forces banks to constantly analyze the proposed loan products and loan products to competitors, to develop and introduce new versions of products, improve existing conditions, taking into account the changing needs of the population, the provision of new social groups of potential borrowers, uses of credit and other factors. In the process, the banks are increasingly collaborating with sales, service, insurance and other organizations providing credit in conjunction with other services. The specificity of the emergence of different types of retail lending, their interrelation and interpenetration leads to the necessity of ordering and classification of retail banking loans, as well as its continuous improvement and additions.

The choice of reasonable criteria differentiation of types of retail loans based on certain classifications is rather difficult, but important problem. Scientific approaches to the classification of bank loans illuminated by representatives of such scholars H. Babin, U. Dremova, A. Lavrushin, W. Lexis, E. Litvinov, M. Petukhov, A. Plyetinska, N. Syekirina, M. Chirkova, N. Shabanova and others. The article aims to systematize criteria for the classification of retail banking loans, which will increase the efficiency of banks through differentiated product range of loans to meet the needs of customers.

After systematization and critical analysis of scientific approaches to the classification of retail banking loans formed a plurality of types of loans and are presented in the form of classification of retail loans, depending on the following conditions: bank control over how the borrower spends money; speed of the Credit application; credit facility; credit terms; support; method of payment; Terms of; method of charging interest; giving way; category of the borrower; the amount of the loan; currency loan; type of interest rate; method of evaluating creditworthiness; segment of the retail market; sales channel.

The classification best reflects the diversity of the types of retail banking loans and can be used to diversify the credit risk of investments, development of various loan products for the effective organization of retail lending, as well as to develop a differentiated system of assessing the creditworthiness of private borrowers.

Author Biography

Anatolii Kharchenko, Cherkasy Institute of banking of the University of Banking of the National Bank of Ukraine

lecturer of department of finance and credit

References

Petukhova M. V. (2012), Improving the system of risk assessment and management in retail lending, Abstract of thesis for the degree of candidate of economic sciences, Novosibirsk, 22 p. (rus).

Dziubliuk O. (2010), The mechanism of providing of loan portfolio quality and credit risk management of the bank during the economic crisis, Journal of the European economy, 1, pp. 108-124 (ukr).

Leksis V. (1994), Credit and Bank, Moscow, 118 p. (rus).

Litvinov E. O. (2012), The loan burden of the population of Russia: problems of theory and methodology, Volgograd, 147 p. (rus).

Lavrushyn O. I., Afanasyeva O. N., Korniyenko S. L. (2008), Banking: the modern system of credit, Moscow, 264 p. (rus).

Pletenskaya E. M., Pshenichnikov V. V. (2013), On the classification of consumer loans, Financial Bulletin, 1 (27), pp. 15-19 (rus).

Babina N. V. (2009), On the classification of consumer loans, Service in Russia and abroad, 1, pp. 25-36 (rus).

Chirkova M. B., Iyevleva A. A. (2010), Retail loan products of commercial banks: the nature, types and classification criteria, Bulletin of the Russian State Trade and Economic University, 1 (39), pp. 121-128 (rus).

Siekirina N. V. (2012), Classification problems of credit operations of banks, Business, marketing, management, 34, pp. 536-542 (ukr).

Dremova U. (2008), Theoretical bases of bank term loans, Bulletin of Lviv University, 40, pp. 88-93 (ukr).

Rawls J. B. (1995), Bank management, Moscow, 768 p. (rus).

Published

2015-01-20

How to Cite

Kharchenko, A. (2015). Classification of retail banking lending. Skhid, (6(132), 36–41. https://doi.org/10.21847/1728-9343.2014.6(132).29528

Issue

Section

Economy