Forecasting Credit Risk Systems of Consumers in Saudi Arabia

this study critically analyzes factors (the macroeconomic indicators, credit policies, and regulations, and the behaviour of borrowers) that affect the credit risk system for Small Medium Enterprises (SMEs) within the context of Saudi Arabia. This would help decision makers to have a reliable forecasting model that financial organizations can use to reduce credit losses. Data was extracted from a total of 48 SMEs companies. Data covered financial ratios of profitability, liquidity, solvency, Activity ratios, and other ratios related to log of total assets and log of total sales. After conducting logistic regression, and measures of KMO measure and Bartlett’s test, the findings indicate that liquidity and activity ratios are significant factors that affect in predicting default risk. Furthermore, this study highlighted the requirement for a tailored credit risk assessment model for SMEs