IMPROVING THE METHODOLOGY OF CREDIT RISK MANAGEMENT IN LENDING TO BUSINESS ENTITIES

Abstract

Under market economy conditions, commercial bank loans represent one of the primary sources for financing business entities. Bank credits enable enterprises to expand production capacities, form working capital, adopt new technologies, execute investment projects, and generate employment opportunities. Simultaneously, lending to commercial entities constitutes one of the highest-risk operational directions for banking institutions; failure to recover credit funds fully and in a timely manner can adversely affect a bank's liquidity, profitability, and capital adequacy. Therefore, effective credit risk management serves not only to secure the financial stability of commercial banks but also stands as an essential prerequisite for the uninterrupted financing of entrepreneurship.