MULTIPLE REGRESSION TOOL FOR CREDIT RISK MANAGEMENT

In classical theory, the risk is limited to mathematical expectation of losses that can occur when choosing one of the possible variants. For banks, risk is represented as losses arising from the completion of one or another decision. Bank risk is a phenomenon that occurs during the activity of banking operations and that cause negative effects for those activities: deterioration of business or record bank losses affecting functionality. It can be caused by internal or external causes, generated by the competitive environment. The concept of risk can be defined as a commitment bearing the uncertainty due to the likelihood of gain or lossbanking system, credit risk, multiple regression.

Credit Risk Management in Terms of Basel III

As volatility has become the dominant environment in which banks operate, they were put in a position to meet new challenges and to face greater risks, reason for the Supervisory Institutions to develop complex models for credit risk management. On the other hand the financial crisis has shown that Basel II has several shortcomings and must be upgraded so the Basel Committee on Banking Supervision (BCBS) proposed in the end of 2009 Basel III, a comprehensive strategy for regulation, supervision and risk management of internationally-active banks.credit risk, management, financial crisis, Basel III.