Sources Of Credit Risk

It is undoubtable true when saying that the credit risk is very diverse and it involved so the entire process of bank credit to customers and the economy. Therefore, it causes lots of credit risk and multifamily types such as market risk (commodity price agro, agro exchange rate); risks from customers (by project, business plan ineffective, unworkable); environmental risks (economic, legal); risks from the bank carrying technical factors and human factors: operational risk, transaction risk. However, the most common is soy prices have the following main reasons:

Sources of credit risks are primarily classified into two groups which are internal and external factors. Internal factors are risk-causing sources that can be controlled if firms have

Possibly due to the design of credit products is inconsistent with the needs and characteristics of the borrower, or the still heavy bureaucratic nature, the way in trading activity with customers, or because staff bank of violating professional ethics, customer collusion, bribery, intentional irregularities.

f) Poor decision making

Being subjective in making decision of credit approval can be another aspects leading to higher credit risk. In credit risk management, the decision not only belongs to the maker, it also depends on the data analysis and other method of measure of system. So that, giving out poor decision making will make a bad impact in managing the credit risk.

g) Over-lending

The collateral price can fluctuate depending on economic issues, so banks should consider carefully and predict how much the collateral will be valued at in the future, especially in frequently encountered cases to avoid lending too much which is above the collateral

(Joseph, 2013). That is the impact of changing consumer habits in the society, especially in the transitional period of our country's economy. if businesses do not have the time to grasp the degree of change which will have difficulties in their business activities, may even lead to bankruptcy, it will directly, or indirectly causing difficulties for bank in operation for on.These really matter requires each bank to have marketing activities effectively and qua.trong phase harsh competition in the economy.

c) Influence of technological factors.

Technological factors currently very important factor determining the competitiveness on the market for each bank. In fact, the change of information technology has significant impact to business operations of the bank and to the whole process of credit extension. Through which it aims to fully exploit the capital of time, prolonged arm of banking operations and keep their place in the national economy. Contributing to limit risks in the banking business in general and in particular credit operations.

d) Iimpact of legal political