Credit Analysis and Lending Management 5E (Paperback)

Authors: Milind Sathye & James Bartle

GST: $11.5 included

  • Stock : in stock
  • SKU : 056
  • ISBN : 978-1-925954-27-2


Lending is one of the most important functions of any lending institution and, if not managed properly, it can lead to credit quality problems that potentially threaten the very existence of the financial institution. To manage the lending function properly and mitigate credit quality problems, staff adequately trained in risk assessment and management are required.

Credit Analysis and Lending Management, Fifth Edition is a comprehensive and complete textbook on credit risk analysis and lending management. It is intended to be a key resource in the training of staff in the financial sector.

The book is divided into six parts, including 17 chapters. Parts I & II present a framework for assessing and managing credit risk. Parts III & IV include chapters that deal with special types of lending: consumer lending, corporate lending, small business lending and international lending. Part V details credit risk management and measurement techniques, and problem loan management. Part VI then looks at other forms of finance: microfinance, agricultural finance, quantitative finance and financial technology (FinTech). FinTech is a new addition to the book and recognizes the ever-changing financial environment.

Throughout this text, learning objectives are clearly indicated at the beginning of each chapter, and the chapter content then directly addresses these objectives. Additionally, new concepts are developed in a brick-by- brick manner and supplemented by clear and useful examples.

This Fifth edition has been fully revised and updated to address issues from COVID-19 and the global financial crisis (GFC), including changes to the prudential standards.

Additional information


Milind Sathye & James Bartle






Soft cover



Table of Contents

Credit Analysis and Lending Managements – Table of Contents

  • About the authors xi
  • Milind Sathye xi
  • James Bartle xi
  • Preface xiii
  • Part 1 - Overview 1
    • Chapter 1: The principles of lending and lending basics3
      • Introduction4
      • The principles of good lending5
      • Industry insight13
      • A framework for credit and lending decisions16
      • The lending process19
      • Industry insight22
      • Characteristics of different types of advance25
      • Different types of borrower29
      • Structuring of loans and advances33
      • Credit culture35
      • Industry insight36
      • Designing a loans and advances portfolio37
      • Summary37
      • Discussion question39
      • References and further reading39
  • Part 2: Analysis and Interpretation of Credit Risk41
    • Chapter 2: Financial statements analysis 43
      • Introduction 44
      • Why do lenders analyze financial statements?45
      • Analysis of financial statements47
      • Techniques of analysis used in project finance62
      • Step-by-step approach to financial statements analysis69
      • Detecting window dressing, frauds and errors73
      • Industry insight76
      • Use of financial ratios by loan officers78
      • Industry insight81
      • Limitations of financial statements analysis84
      • Summary85
      • Discussion questions86
      • References and further reading87
    • Chapter 3: Credit scoring techniques89
      • Introduction90
      • An example of a credit application scorecard91
      • Industry insight93
      • Background information on credit scoring97
      • How to build a credit application scorecard104
      • Moving beyond credit application scorecards107
      • The future of credit scoring109
      • Summary110
      • Discussion questions111
      • References and further reading 111
    • Chapter 4: Credit risk analysis: An introduction113
      • Introduction114
      • What is credit risk?114
      • How do we analyze credit risk?116
      • Putting it all together132
      • Industry insight137
      • Industry insight138
      • Artificial Intelligence139
      • Summary140
      • Discussion questions141
      • References and further reading142
  • Part 3: Consumer Lending143
    • Chapter 5: Consumer lending 145
      • Introduction146
      • Types of consumer loan147
      • Industry insight150
      • Evaluating consumer loan applications155
      • Example of a consumer loan application161
      • Precautions to be taken in granting consumer loans163
      • Credit scoring consumer loan applications165
      • A day in the life of…168
      • Legal aspects of consumer credit170
      • The National Credit Code170
      • Trends in consumer credit172
      • Trends in personal lending173
      • Trends in credit card lending174
      • Industry insight177
      • Pricing and structuring of consumer loans181
      • Summary185
      • Discussion questions186
      • References and further reading188
    • Chapter 6: Real estate lending191
      • Introduction192
      • Industry insight192
      • Evaluating real estate loan applications193
      • Industry insight199
      • A day in the life of…202
      • Example of a real estate loan application204
      • Precautions in granting real estate loans206
      • Trends in real estate credit207
      • Industry insight207
      • Pricing and structuring of real estate loans209
      • Industry insight213
      • Industry insight216
      • Summary220
      • Discussion questions221
      • References and further reading223
    • Chapter 7: Security, consumer credit legislation and legal aspects of lending225
      • Introduction226
      • Overview of the legal framework for consumer and real
      • estate loans227
      • Anti-Money Laundering and Counter Terrorism
      • Financing Act 2006232
      • Loan documentation236
      • Special rights of lending bankers242
      • Legal requirements specific to home loans243
      • Other relevant legal requirements in lending246
      • Industry insight249
      • Industry insight251
      • Industry insight252
      • Checklist for lending officers255
      • A day in the life of…256
      • Summary259
      • Discussion questions260
      • References and further reading261
  • Part 4: Corporate and Business Lending263
    • Chapter 8: Corporate lending265
      • Introduction266
      • An overview of corporate lending266
      • The purpose of corporate lending267
      • The principles of corporate lending268
      • Credit rating agencies277
      • Skills required of the loan officer278
      • The importance of financial statements279
      • Managing the loan portfolio280
      • Project finance – putting together some issues286
      • Summary288
      • Discussion questions289
      • References and further reading290
    • Chapter 9: Small business lending291
      • Introduction292
      • Industry insight304
      • The political importance of small businesses and small
      • business lending306
      • Industry insight307
      • A day in the life of…309
      • A theoretical basis for understanding lending to small businesses313
      • Lending technologies and small businesses316
      • Main economic and operational constraints faced by small businesses318
      • Risks associated with small business319
      • Two approaches to small business lending326
      • Implications for Australia339
      • Summary339
      • Discussion questions340
      • References and further reading341
    • Chapter 10: International lending345
      • Introduction346
      • Structure of international financial system346
      • Principles that underpin international lending351
      • Products used in international lending354
      • Risks in international trade transactions361
      • Post-shipment finance362
      • Industry insight364
      • Special types of credit facilities367
      • Uniform customs and practice for documentary
      • credits368
      • International exposure of Australian banks369
      • Global financial markets policy responses to COVID-19369
      • Summary369
      • Discussion questions370
      • References and further reading371
  • Part 5: Assessment and Management of Risk373
    • Chapter 11: Credit risk measurement and management of the loan portfolio375
      • Introduction376
      • Credit risk measurement377
      • Altman’s Z score378
      • Credit Portfolio view387
      • Portfolio management387
      • Managing the portfolio396
      • A day in the life of…401
      • Industry insight403
      • Loan pricing405
      • An example of loan pricing…408
      • A day in the life of…411
      • Summary413
      • Discussion questions414
      • References and further reading41
  • Chapter 12: Credit risk from the regulator’s perspective417
    • Introduction418
    • Capital adequacy419
    • Large credit exposures427
    • Securitisation427
    • Credit derivatives429
    • Developments in regulation430
    • Industry insight434
    • Summary438
    • Discussion questions439
    • References and further reading440
  • Chapter 13: Chapter 13: Problem loan management441
    • Introduction442
    • Causes of default442
    • The extent of problem loans443
    • Industry insight444
    • The business cycle444
    • Problem loans, provisions and regulatory issues446
    • Other considerations with problem loans446 Industry insight447
    • Through the cycle provisions – Expected credit loss449
    • Dealing with defaults449
    • Industry insight454
    • Examples from the law456
    • A final word457
    • Summary457
    • Discussion questions458
    • References and further reading459
  • Part 6: Other Forms of Finance461
    • Chapter : Chapter 14: Microfinance463
      • Introduction464
      • What is microfinance?464
      • Industry insight470
      • Microfinance institutions and their performance473
      • Industry insight476
      • Microfinance in Australia478
      • Industry insight481
      • Summary482
      • Discussion questions483
      • References and further reading483
    • Chapter 15: Agricultural finance485
      • Introduction486
      • Classifying broadacre farming487
      • Broadacre farming and water489
      • Other aspects of broadacre agriculture491
      • Broadacre farming as a production process494
      • Broadacre farming and people498
      • Lending to farmers501
      • Some concluding remarks518
      • Summary518
      • Discussion questions519
      • References and further reading520
  • Chapter 16: Quantitative finance521
    • Introduction522
    • Concentration risk523
    • Expected losses524
    • Probability of default526
    • Loss given default528
    • Transformation regressions529
    • Decision trees and neural networks529
    • Prepayment risk530
    • Concluding remarks531
    • Summary531
    • Discussion questions532
    • References and further reading533
  • Chapter 17: FinTech535
    • Introduction536
    • Financial intermediation537
    • Products539
    • Risk546
    • Regulation548
    • A day in the life of…549
    • Crypto lending550
    • Summary551
    • Discussion questions552
    • References and further reading552
    • Index553


250 x 200 mm

About the authors
Author 1

Milind Sathye is Professor of Banking and Finance and Head: Accounting, Banking and Finance Discipline at the University of Canberra. His research focus is on efficiency and productivity, AMLCTF, e-ba

Author 2

James Bartle

James Bartle has over twenty years of experience in the finance industry and has worked in various credit and treasury positions in the Commonwealth Bank of Australia, KPMG Management Consultants and Bancorp Australia. James’s consulting experience has given him exposure to Australian banks, government and corporates. He has completed assignments in New Zealand, Malaysia and Indonesia.




1.3 kg


200 × 250 cm


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Credit Analysis and Lending Management (Fifth Edition)

Credit Analysis and Lending Management 5E (Paperback)

GST: $11.5 included