The Impact Of Using Financial Statement Analysis On Credit Granting Decisions In Algerian Banks

Abstract

This study investigates the impact of using financial statement analysis in making credit granting decisions in Algerian commercial banks. To achieve this, a questionnaire was designed and distributed to employees of the Algerian Foreign Bank. It included all the data required to know the impact of using financial statement analysis in making credit granting decisions. The statistical analysis program SPSS version No. 22 was used to process the data and test the hypotheses. The data collected included all the necessary information to assess the impact of financial statements analysis on Credit decision-making. The statistical analysis software SPSS (version 22) was used to process the data and test hypotheses. The study reached a number of key findings, including: ▪ Algerian commercial banks rely on financial statement analysis to make credit decisions; ▪ Internal bank policies encourage reliance on financial statements analysis as a fundamental basis for credit decisions- making; ▪ The credit decisions process is based on several key financial ratios such liquidity ratios, financial structure ratios, and comparison of financial indicators related to the customer's activity. In-kind guarantees also play a crucial role in the decision- making process . We also presented a set of recommendations, the key Recommendations of which are: ▪ Increase the focus on financial analysis by training credit officers, and appointing qualified, experienced staff in this domain; ▪ Encourage credit analysts to pay greater attention to relevant financial ratios to guide rational credit decisions