Scoring: Failure Risk Management Tool for SMEs in Algeria

Abstract

Algerian public banks need to implement credit risk management techniques tailored to the specific characteristics of SMEs to prevent the deterioration of the banks’ solvency due to the degradation of the quality of their SME portfolios. In this regard, our main objective is to highlight the interest that credit risk management will have within the People’s Credit of Algeria by developing a Credit Scoring model based on the logistic regression technique, using a sample of 226 SMEs. The study results demonstrate the importance of the logistic regression model in classifying companies and its predictive ability for default, with a good classification rate of 91.2%.

Keywords

• banks
• smes
• scoring
• risk
• credit
• algeria
• g21
• c13