Identifying and applying the value of institutional firm credits by the banks

The thesis generally includes the definitions of risk and credit risk, and the techniques used by the banks to minimize the credit risk as there is increase in globalism and product variety in parallel to interaction and also the banks which are the supportive for the related sectors have taken over. Depending on these issues, credibility and rating concepts have been explained, and legal and environmental limitations have also been defined.Through the notions discussed in the dissertation, the steps of the process in which any firm is rated by the bank have been described. In other words, the application necessities aiming to increase productivity; the new credit model adopted by the banks has been covered. As a result, the rating system which is implemented to decrease the credit risk for the banks has been brought up. Also, the importance of the rating system used by the banks to minimize the credit risk has been mentioned, and therefore the obligation of providing the continual system development has been emphasized. In parallel with the development, quantitative methods used in the process of determining credibility have been cited. In the light of the information given here, the data of a firm has been obtained to apply the methods mentioned above and the credibility value has been acquired by both the question set used in the new method and Altman-Z Score, which is one of the statistical methods used to minimize the credit risk and also with the help of financial statement analysis.Consequently, the results obtained through the two methods used in the application have been compared, and it has been explained that the credit risk can be minimized through a more detailed system by the banks.