THE IMPACT OF EXTERNAL FACTORS ON THE DECISION TO
GRANT A LOAN. A CASE STUDZ ON ROMANIAN BANKS

Lucian Găban, "1 Decembrie 1918" University of Alba Iulia


ABSTRACT: The objective of this study is to identify external factors having a significant impact
on the probability of granting a loan, and to construct a credit scoring model for small and
medium enterprises. Applying the logit analysis, we have found three external predictors which
characterize the firm's financial condition. These predictors are as follows: EBITDA, ROI, and
CR, and they influence the decision to grant a loan. The significant non-linear effects improve
the quality and prediction power of the model. These external factors predict 85 percent, a high
percentage of correctly classified observations.

KEYWORDS: the probability of granting a loan, credit scoring, logit model, non-linear effects

JEL CODES: G21, G23