PERFORMANCE MEASUREMENT

It is the process of collecting, analyzing and/or reporting information regarding the performance of an individual, group, organization, system or component. It can involve studying processes within organizations, or studying processes, to see whether output are in line with what was intended or should have been achieved. Some performance measurement systems in use today are the Balanced Scorecard, Performance Prism, and the Cambridge Performance Measurement Process.

Measuring the Likelihood of Small Business Loan Default

The two types of risk analysis are:
Qualitative Quantitative

Qualitative risk analysis is done by interviewing the potential borrower, look over the business plan (if available) and review past financial history. Quantitative analyses are used to create a credit score, which quantifies the predicted risk of the borrower.

 Some predictors of default used include

applicants monthly income financial assets outstanding debt employment tenure Homeownership previous loan defaults or delinquencies