An analysis of the effects that the evolving financial environment has on banks assessment of borrowers

This master thesis examines the effect changes in the environment surrounding the banking industry have on the banks assessment of borrowers. Our main approach to this subject is to interview different banks. Further on we do an analysis of financial figures to examine the assertions made in the interviews. Our research shows that banks make changes in the credit approval system continuously. These changes are either based on the bank’s own experience or changes in the regulations the bank is subjected to. Practically all of these changes affect the borrowers to some extent, mainly in the form of higher interest rates. The banks have also gotten more selective when they assess new clients, specially the clients they perceive as high-risk. As a result some corporations experience difficulties in getting financing from banks