Rajagopal (1996) built an attempt to overview the bank's risk management and suggests a model pertaining to pricing the merchandise based on credit rating risk examination of the consumers. He figured good risk management is good bank, which in the end leads to lucrative survival in the institution. An appropriate approach to risk identification, measurement and control will guard the interests of bank institution in long run.
Froot and Stein (1998) identified that credit risk management through active loan purchase and sales activity affects banks' investments in risky loans. Banking institutions that purchase and sell financial loans hold more risky financial loans (Credit Risk and Loss loans and commercial real estate loans) being a percentage from the balance sheet than any other banks. Once again, these results are especially dazzling because banks that manage their credit rating risk (by buying and selling loans) hold even more risky loans than banks that simply sell loans (but may buy them) or financial institutions that simply buy financial loans (but don't sell them).
Treacy and Carey (1998) examined the credit risk rating mechanism at US Banking institutions. The daily news highlighted the architecture of Bank Inside Rating System and Operating Design of ranking system to make a comparison of bank program relative to the rating agency system. That they concluded that banks internal ranking system helps in managing credit rating risk, earnings analysis and product pricing.
Duffee and Zhou (1999) model the results on banks due to the advantages of a industry for credit rating derivatives; particularly, credit-default swaps. Their paper examined that a traditional bank can use trades to in the short term transfer credit risks with their loans in front of large audiences, reducing the likelihood that defaulting loans trigger the bank's financial stress. They figured the introduction of a credit derivatives market is not really desirable because it can cause additional markets for loan risk-sharing to break down.
Ferguson (2001) analyzed the models and judgments linked to credit risk management. The author...