Commercial lending in Malta : the lending process and associated risks

Abstract

Prior the financial crisis, less emphasis was given to credit risk management with respect to the lending process. After the 2007-08 global financial crisis, a need for new regulations and measures arised which meant more stringent risk analysis especially for banks. Since lending is one of the main activities carried out by commercial banks, greater emphasis is put on credit risk management in the lending process. Thus it’s important for banks to get to know their customers and analyse all the documents provided in order to avoid the borrower to default on his obligations. This study attempts to analyse the local lending process conducted by Other Systemically Important Institutions (O-SII)1 in Malta and also to carry out a comparative analysis on the current state of credit risk management across O-SII. Therefore both primary and secondary data will be used in order to get a good knowhow of the subject and come up with a good comparative analysis between the banks assessed.