Bank Lending Decisions Using Projections: A Case-study Approach

Abstract

This paper, by emphasizing on the process and dynamics of bank corporate credit decisions, presents a description of an introductory case-study suitable for an undergraduate/MSc banking or business finance course.  The case exists in two parts and is designed for instructors to be able to use only those parts which they consider appropriate to their objectives and time considerations. In two or three seventy-five minute classes—depending on the parts of the case utilized and the time allowed for student interaction—instructors can have students explore the factors that influence the lending decision and focus on the interpretation of the mechanical process used in constructing projected financial statements for the identification of the actual borrowing needs of a specific company.