The Extent of the Adoption of the 5Cs Credit Criteria Model as a Mechanism for Granting Bank Credit

Abstract

Bank credit represents an important aspect of the functions of commercial banks and is the core of their work. It is rare to find a project in practical life that relies on its own resources for its activity. Rather, these projects seek to feed their working capital through the credit provided by banks. Therefore, we note that banks pay attention to factors such as security, profitability, and liquidity when granting credit. Hence, the idea of this research emerged, highlighting the mechanism for granting bank credit using the 5Cs credit criteria model, given its significant importance in assessing the extent of risks that may arise from granting credit. This was applied to a group of banks operating in the city of Nasiriya, using a questionnaire designed for this purpose. The results of the study showed that credit analysis using the 5Cs credit criteria model is an important and effective tool for assessing the financial status of the borrowing customer and their ability to repay their debts before granting them bank credit, thus reducing, as much as possible, the extent of the risks to which the bank may be exposed as a result of granting them that credit. In light of this, the most important recommendations were made, which require the need to activate the role of risk management. In credit decision-making, as well as training personnel in the Risk Management Department in the field of monitoring and following up on credit granted according to scientific and advanced principles.