DR. CARLOS S.

LANTING COLLEGE
BASIC EDUCATION DEPARTMENT
SENIOR HIGH SCHOOL
Quezon City

Credit Risk Management: Assessment of Debtor’s

Demographic Characteristic as a Basis of Creditworthiness

A Research Project
Presented to the Faculty of the
Basic Education Department / Senior High School
DR. CARLOS S. LANTING COLLEGE
Quezon City

by:

Condes, Kimberly V.
Ovejas, Clarisse Anne Nicole C.
Ramos, Nathalie Asia C.
Zartiga, Fritzie Ann C.

In Partial Fulfillment of the Requirements for the Program of

SENIOR HIGH SCHOOL

Credit Risk Management: Assessment of Debtor’s Demographic Characteristic as a basis of Creditworthiness

 DR. CARLOS S. LANTING COLLEGE
BASIC EDUCATION DEPARTMENT
SENIOR HIGH SCHOOL
Quezon City

Chapter 1
INTRODUCTION
Background of the Study
Throughout the years, the exposure to credit risk has been a leading cause of
problem to banking industry as it affects the outgrowing success of a certain
institution. Credit risk is the possibility for a debtor in terms of failure to meet the
obligation of returning the amount of money borrowed, resulting to loss on the
creditor’s side. Effective credit management is the key to eradicate all these threats,
preventing the financial institution to collapse and face bankruptcy.
According to M. S. Saeed, 2016 in his article entitled, “The Impact of Credit Risk
on Profitability of the Commercial Banks”, banks face too many serious problems due
to unsuccessful credit risk management but the credit lending remains the chief
activity of the banking sector throughout the world. The core cause behind it that
banks can no longer survive without this activity. Specifically, credit management
serves as a life blood of the institution since it will help regulate a better cash flow
management.
One of the factors of which affects the credit risk is that there are various
demographic characteristics of the potential borrowers that leads to restriction of the
loan groups of lending them capital goods. The researchers decided to conduct a
study that aims to know analysis of the debtors' demographic characteristics as a
basis of their creditworthiness. Specifically, the study aims to know the typical age,
sex, occupation, marital status and source of income of the debtors. Furthermore,
awareness will be given to loan group or financial institutions.
In conducting the study, the researchers will use the quantitative method in
order to attain the information needed to be gathered wholly.
Statement of the Problem
Credit risk is one of the common issues that financial institutions they are
facing. It is also the risk of loss due to unpaid balances of debtor. Factors that cause
such are loans, acceptances, interbank transactions, and etc. The study aims to know

Credit Risk Management: Assessment of Debtor’s Demographic Characteristic as a basis of Creditworthiness

 DR. CARLOS S. LANTING COLLEGE
BASIC EDUCATION DEPARTMENT
SENIOR HIGH SCHOOL
Quezon City

to determine the financial capability of their potential borrowers which serves as the
qualifications or standards of loan groups.
In addition, it also aims to know the after effects of credit risk to the loan group
and how they cope up with these circumstances. Aside from identifying the crises,
this study will raise knowledge on how to manage credits better.

Objectives of the Study

Upon conducting this research, it aims to know the analysis of the debtors'
demographic characteristics as a basis of their creditworthiness.
Specifically, the study aims:
1. To assess the credibility of a borrower depending on their:
a. Age
b. Sex
c. Occupation
d. Marital Status
e. Source of Income
2. To grant consciousness based on the findings from the thesis
3. To gather information on how they cope up with the credit risks they encounter

Scope and Limitations of the Study

The focus of the study is to determine the credibility of the debtors which may
expose the institution to credit risks. It is only bounded to around the areas of
Sangandaan, Novaliches Quezon city and to be answered by atleast 10 respondents.
The researchers will distribute 10 survey questionnaires to be answered by the
chosen loan group or financial institution.

Significance of the Study

The result of this study will highly contribute significance to the following
entities:
a.) Financial institution- This paper can be beneficial to every financial
institution because they can gain knowledge on how to enhance their credit

Credit Risk Management: Assessment of Debtor’s Demographic Characteristic as a basis of Creditworthiness

 DR. CARLOS S. LANTING COLLEGE
BASIC EDUCATION DEPARTMENT
SENIOR HIGH SCHOOL
Quezon City

management. Moreover, identify the various problems in credit management that

hinders them to enhance and find ways to solve it. They can also avoid the said
problems they might encounter during the process.

b.) Debtor- This research can contribute in enhancing the knowledge of

debtor. They can gain knowledge through this research by knowing the qualification
or standards of the loan group.

c.) Researcher- This study is helpful to researcher that will conduct studies
related to this topic. This can serve as his guide and reference because the overall
result discusses the comprehensive ideas regarding credit risk.

Credit Risk Management: Assessment of Debtor’s Demographic Characteristic as a basis of Creditworthiness