Credit Risk Management - Science topic

I am working on the effects of credit risk management on profitability of Indian private banks. I want to find the data on PCR for the regression model.

The main purpose of a central bank's activities is to take care of the value of money, its stability against other currencies and the security of the banking system. However, since the 1970s, since the period of the rise of monetarism developed in accordance with Milton Fredman's concept of monetarism, the increase in the scale of economic globalisation, the transition of international monetary systems from the USD-based system, the system established after the Second World War in Bretton Woods to a system of free market exchange rates, the abandonment in the USA of gold parity with the USD currency, the growth of multinational corporations, the increased importance of speculative financial transactions carried out on foreign capital markets, including securities markets, etc. Central banks are also involved in the processes of stabilising the economy as part of anti-crisis programmes and protecting national labour markets, with the aim of limiting the scale of the increase in unemployment. In some countries, these new, additional central bank functions are added to the legal regulations shaping the functioning of the central bank. In some countries, the issue of linking the central bank's monetary policy is implemented informally.

For years, the central bank in Poland has also been conducting speculative transactions on international financial markets using various currencies and securities. For many previous years, the bank generated a net profit of PLN 9-10 billion of which 95 per cent of this profit was transferred to the state budget by the politically connected central bank to the government, instead of feeding the central bank's reserves and increasing the security of the financial system. For 2021, the central bank in Poland, i.e. the National Bank of Poland, generated as much as PLN 11 billion in net profit thanks to speculative transactions on the international financial markets, almost all of which went to the state budget rather than to central bank reserves, as usual. The annual profit generated by the central bank in Poland until 2021 was a consequence of, among other things, the monetary policy pursued by the bank, which consisted in successive depreciation of the domestic currency PLN against other currencies. However, for 2022, the National Bank of Poland unexpectedly raked in a historically record loss of PLN 17 billion. Could it be that the speculative transactions carried out in 2022 on the international financial markets turned out to be wrong this time? In addition, another key question arises: to what extent will this kind of situation result in a decrease in the level of security of the entire banking system?

In view of the above, I address the following question to the esteemed community of scientists and researchers:

And what is your opinion on this?

What is your opinion on this subject?

Please respond,

I invite you all to discuss,

Thank you very much,

Best wishes,

Dariusz Prokopowicz

Globally, financial institutions, including commercial and investment banks continue to finance on a large scale the development of dirty energy based on the burning of fossils and the mining sector involved in extracting fossil fuels from the earth's crust. On the other hand, in recent years, financial institutions, including commercial banks recognizing the growth of pro-environmental, pro-climate and pro-environmental awareness of citizens, i.e. also customers of banking product and service offerings. Therefore, in order to improve their image in advertising campaigns, conferences, public relations meetings, etc., they present themselves as green financial institutions offering green loans, green bonds and other forms of green external financing. So-called green external financing is carried out by banks on the same terms or on a slightly promotional basis vis-à-vis other types of external financing not qualified by the definition of these terms as green financing. The research shows that financial institutions, including commercial banks are practicing greenwashing by advertising so-called green loans, i.e. loans which they have been providing for many years on a small scale and recently, in connection with the fashionable trends for sustainable economy, green economy, green transformation, closed loop economy, realization of sustainable development goals, have called green loans. In addition, individual commercial banks in order to distinguish themselves from each other in terms of their green financing offers and their green financial institution missions, missions articulated in advertising campaigns and marketing communications with customers are for the same issues of green, sustainable, zero-carbon closed loop economy use different terms for the same issues. Well, in marketing communications using the issues of the above-mentioned issues, they use different terms for sustainable economy, green economy, green economy transformation, closed loop economy, realization of sustainable development goals, etc. Since commercial banks have for many years been lending, among other things, to such economic ventures as the construction of sewage treatment plants, the erection of a windmill to generate electricity, the acquisition of new technologies by a municipal cleaning company, etc., and it is only recently that this financing has been called green financing and is particularly promoted and highlighted in advertising campaigns that there are considerations about the possibility of large-scale greenwashing by financial institutions operating in this way. Just as many years ago, when the concepts of sustainable economy, sustainable development goals, zero-carbon economy, closed-loop economy did not appear in the marketing communications of commercial banks, media debates, or did not yet exist at all, commercial banks financed pro-environmental business ventures, which at the time were not defined and defined in such a way. However, both at that time, e.g. in the late 1990s and earlier, the scale of lending that financed pro-environmental, pro-climate, pro-sustainability economic ventures was relatively small. The situation is similar today. In the 1990s in Poland, even a commercial bank, which has the term “Bank Ochrony Środowiska” in its name, also granted loans to finance projects that had nothing to do with ecology and sustainable economic development and the financing that we now call green was only part of the total lending activity. On the other hand, the relatively small increase in the scale of green lending by commercial banks recorded in recent years is due to the banks' use of emerging opportunities for co-participation in green financing programs for investment projects carried out mainly in the field of green transformation of the energy sector, including, for example, financing the installation by prosumers of photovoltaic panels on the roofs of their properties or businesses based on financial subsidies from the state's public finance system and/or European Union grants. Co-participation of commercial banks involves, for example, providing bridge loans to borrowers who, using subsidies from the state's public finance system, implement certain pro-climate and/or pro-environmental economic projects. In POlska, some such programs for financing green economic ventures with subsidies are combined with the obligatory use of bridge loans pending the transfer of subsidies. In Poland, banks have lobbied in the political sphere for this kind of solution in order to increase for themselves the market for loans granted and to increase the scale of the various types of loans that have been granted for years, which now then qualify for so-called green financing. In addition, commercial banks are motivated to develop green financing by the new European Union regulations coming into force regarding the corporate obligations imposed first on large corporations, large enterprises and companies and in subsequent years, i.e. from 2025 onwards, also on SME operators with regard to obligations to implement expanded, non-financial ESG reporting. The aforementioned expanded, non-financial ESG reporting is to play the role of increasing the transparency of companies, including equity companies, listed companies to shareholders, business counterparties and customers, and is to play the role of a motivator to increase the scale of implementation of pro-climate, pro-environmental, green business ventures, increase the scale of inclusion in the processes of green transformation of the economy and the implementation of sustainable development goals. commercial banks have seen in this process synergies for themselves and new opportunities for business development and cooperation with key customers such as business entities. Subsequently, all these emerging opportunities in recent years that banks use to scale up the development of green financing are presented in advertising campaigns as key determinants of their banking business presented as green banking, socially responsible banking, climate and environmentally responsible banking, banking that pursues many of the goals of sustainable development, banking that is highly supportive of the green transformation of the economy which is often an outstanding exaggeration of this issue, i.e. presenting themselves as green financial institutions. In view of the above, many commercial banks that currently use the technique of presenting themselves in marketing communications as green financial institutions on a large scale are practicing greenwashing.

I have described key aspects of the realities of the so-called green finnsing currently practiced by commercial banks, including the green loans they provide and many other key aspects of the green transformation of the economy in the article:

I invite you to familiarize yourself with the issues described in the publications given above, as well as to scientific cooperation in these issues.

In view of the above, I address the following question to the esteemed community of scientists and researchers:

And what is your opinion about it?

What is your opinion on this issue?

Please answer,

I invite everyone to join the discussion,

Thank you very much,

Best wishes,

Dariusz Prokopowicz

In the country where I operate just before the outbreak of the global financial crisis of 2008, commercial banks were extensively issuing mortgages denominated in foreign currency, mainly in Swiss franc, i.e. CHF. Mortgage offers offered in CHF were deliberately structured very attractively for customers, which resulted in a strong increase in lending actions on this type of loans. In 2006-2007, lending actions carried out within the framework of mortgages denominated in CHF grew so strongly that they significantly exceeded lending actions carried out within the framework of mortgages granted in the domestic currency, i.e. in PLN. However, in reality, the offers of these loans were not as attractive as initially presented to customers by the banks. At that time, in the context of high stock valuations on stock exchanges, rising prices of raw materials on wholesale commodity markets, high economic growth rates, rapidly rising real estate prices, good economic conditions, Poland's plans to join the euro zone, the PLN domestic currency exchange rate was in an upward trend. The banks, based on their macroeconomic analysis, knew what was going on, they knew about the overvalued assets, the overvalued PLN against other currencies, etc. The average customer, the potential borrower, did not have this knowledge. Banks took advantage of the asymmetry of information regarding the aforementioned issues of the macroeconomic situation of the economy, the valuation of assets on the capital markets, the level of exchange rates.

Within the framework of their CHF-denominated mortgages, they passed the currency risk arising from changes in exchange rates and the risk of changes in interest rates by the central bank in Switzerland onto the borrowers. Soon after the global financial crisis erupted in mid-September 2008, the exchange rate of the currency of a relatively non-large developing economy with higher investment risk, i.e. the PLN exchange rate against other currencies, instead of continuing to rise it began to fall sharply. The CHF exchange rate, on the other hand, rose rapidly, resulting in a significant increase in the size of the amounts paid to the bank by borrowers with the aforementioned loans in CHF in installments as part of their loan repayments. Before the global financial crisis of 2008, mortgage installments denominated in CHF were significantly lower compared to the situation if the same loan had been taken on analogous terms but in the domestic currency of PLN. On the other hand, after the outbreak of the aforementioned financial crisis, the situation reversed dramatically, as the amount of money paid to the bank in installments of repaid CHF loans increased significantly, and there were later situations that it exceeded the situation if the same loan had been taken on analogous terms but in the domestic currency of PLN. In addition, the loan agreements contained provisions that were prohibited from the point of view of good standards and guidelines of regulatory and supervisory institutions, abusive clauses. The abusive clauses in question were included in these agreements as part of the asymmetry of information used by the banks, occurring in their relations with customers.

In view of the above, the granting of mortgage loans in foreign currency is a deliberate exploitation by commercial banks of the information asymmetry occurring in relations with borrowers, is the transfer of currency risk by the bank to customers, and is an activity that is contrary to the principles of business ethics, corporate social responsibility of banking and, consequently, leads to a decline in the level of public confidence of citizens in relation to banks. Thus, the issue of CHF-denominated mortgages has become one of the significant factors deteriorating the image of commercial banks from the point of view of customers. The granting of mortgage loans denominated in CHF has caused a deterioration in the reputation of commercial banks operating in Poland, a decrease in the level of social responsibility of the banking business and, consequently, also a deterioration in the image of banks as institutions of social trust.

In view of the above, I address the following question to the esteemed community of scientists and researchers:

What do you think about this topic?

What is your opinion on this issue?

Please answer,

I invite everyone to join the discussion,

Thank you very much,

Best regards,

Dariusz Prokopowicz

In recent years, the scale of application of ICT and Industry 4.0/5.0, including Big Data Analytics and Artificial Intelligence technologies in financial institutions, including commercial banks, has been increasing. The banking sector is among those sectors of the economy where the implementation of new information technologies used to build banking information systems is progressing rapidly. This process in highly developed countries has been taking place since the 1960s. Subsequently, the development of computer science, personal computer technology in the 1970s and 1980s, the development of the Internet and business applications of Internet technology since the 1990s and then the development of technologies typical of Industry 4.0/5.0 set the trends of technological progress, the effects of which in the form of new technological solutions quickly found applications in financial institutions. Commercial banks operating in the model of classic deposit-credit banking usually generate the largest part of their revenues from the sale of bank loans and credits. Large universal banks also develop selected elements of investment banking, in which they finance the construction of housing estates through their own development companies, make financial transactions with securities, financial transactions in foreign exchange markets and other capital markets. In all these areas of activity, the key categories of banking risk that banks manage include credit and interest rate risk and other financial risks, i.e. liquidity risk, debt risk. In addition, the key categories of risk that the bank manages in its banking operations include asset-liability mismatch risk in the balance sheet and various categories of operational risks related to the performance of certain activities at the bank, including personnel operational risk related to the staff employed, technical operational risk related to the technical equipment used, system operational risk related to the IT systems used, etc. On the other hand, risks operating in the bank's environment and affecting the bank's operations and indirectly also the bank's financial performance include market risk of changes in the prices of specific assortments relating to specific markets in which banks operate; foreign exchange risk associated with transactions made using different currencies; investment risk within investment banking; systemic risk associated with the functioning of the financial system; political risk associated with the government's economic policy; risks of high volatility of macroeconomic development of the economy associated with changes in the economy's economic situation in the context of business cycles realized on a multi-year scale, etc. However, in a situation where lending activities are the main types of sources of income for a commercial bank then a particularly important category of banking risk that the bank manages is credit risk. On the other hand, due to the rapid development of electronic, Internet and mobile banking, cyber risk management is also growing in importance. New ICT information technologies and Industry 4.0/5.0, including Big Data Analytics and Artificial Intelligence technologies, can be increasingly helpful in managing each of the aforementioned risk categories. The aforementioned new technologies prove to be particularly helpful in the situation of their effective implementation into banking activities in order to improve the processes of managing, among other things, credit risk. An important element of individual credit risk management, i.e. with regard to individual credit transactions, are the methodologies, procedures, processes, etc. concerning the analysis of a potential borrower's creditworthiness and credit risk arising from a bank loan carried out in commercial banks. In view of the above, the implementation of new technologies to support the implementation of the processes of examining the creditworthiness of potential borrowers and improving, among other things, credit scoring analytics, are particularly important aspects of credit risk management, which may translate into increased profitability of commercial banks' bank lending activities.

I described selected issues of improving credit risk management processes, including the issue of screening the creditworthiness of potential borrowers and credit scoring analytics, in an article of my co-authorship:

Determinants of credit risk management in the context of the development of the derivatives market and the cyclical conjuncture economic processes

IMPROVING MANAGING THE CREDIT RISK IN CONDITIONS SLOWING ECONOMIC GROWTH

THE IMPLEMENTATION OF AN INTEGRATED CREDIT RISK MANAGEMENT IN OPERATING IN POLAND COMMERCIAL BANKS

Importance and implementation of improvement process of prudential instruments in commercial banks on the background of anti-crisis socio-economic policy in Poland

GLOBALIZATIONAL AND NORMATIVE DETERMINANTS OF THE IMPROVEMENT OF THE BANKING CREDIT RISK MANAGEMENT IN POLAND

In view of the above, I address the following question to the esteemed community of scientists and researchers:

What do you think about this topic?

What is your opinion on this issue?

Please answer,

I invite everyone to join the discussion,

Thank you very much,

Best regards,

Dariusz Prokopowicz

In recent years, the importance of managing the risk of cybercrime of information systems and the potential loss of data transferred over the Internet has been growing, as well as improving systems and instruments for cyber security of information systems using modern ICT, Internet and Industry 4.0 information technologies, including, among others, Internet of Things technology. A major factor in the growing importance of information systems cybercrime risk management is the rapid development of online and mobile banking. In addition, during the SARS-CoV-2 (Covid-19) coronavirus pandemic, the development of online and mobile banking accelerated. This was due to the increase in the scale of digitization and internetization of various spheres of business entities during the pandemic. The financial sector, including the commercial banking sector, is one of those sectors in the economy where the opportunities for the application of ICT information technologies, Internet technologies, Industry 4.0/5.0 including artificial intelligence, artificial neural networks, machine learning, deep learning, Internet of things, cloud computing, Big Data Analytics, multi-criteria simulation models, digital twins, Blockchain, virtual and augmented reality, etc. are the greatest. On the other hand, this is also a sphere of advanced information systems that is particularly vulnerable to attacks from cyber criminals using various cybercriminal techniques to extort bank account access data from bank customers and/or hacking into e-banking systems. In this area, something is constantly happening. On the one hand, banks are implementing new ICT information technologies and Industry 4.0/5.0 and on the other hand, cybercriminals are also taking advantage of these new technologies. Often it even happens the other way around, i.e., first the cybercriminals create new techniques to seize customer data necessary to log in to bank accounts operating on Internet bubble systems and then the bank's hired IT specialists patch system gaps and improve security for access to bank IT systems, improve firewalls, anti-virus applications, etc. However, commercial banks operating under the formula of classic deposit-credit banking get most of their revenue from their banking activities, generate most of their profits from their lending activities, from providing loans to different types of business entities, to citizens, to other banks that act as borrowers. Procedures for granting credit, improving credit risk management, regulations shaping credit activities improved, perfected and adapted to the changing economic environment usually for many decades. In contrast, the development of online and mobile banking was realized in a much shorter period of time than the development of commercial banks' lending activities. As a result, the procedures associated with lending activities in recent years are no longer subject to the same degree of change as the development of communication procedures, techniques for accessing banking products, etc. under the development of Internet banking. In addition, due to the development of online and mobile banking, the increase in the scale of cyber-attacks on banking systems has increased the importance of improving the security of banking information systems. The aforementioned increase in scale has been faster in recent years compared to the improvement of credit business procedures. As a result, commercial banks have in recent years allocated significantly more expenditures on improving cyber-security systems and instruments for banking information systems, on improving cybersecurity risk management systems than on improving credit risk management systems. Besides, both risk management processes can increasingly be carried out in an integrated manner.

In view of the above, I address the following question to the esteemed community of scientists and researchers:

And what is your opinion on this topic?

What is your opinion on this issue?

Please answer,

I invite everyone to join the discussion,

Thank you very much,

Best wishes,

Dariusz Prokopowicz

I am looking for the name of country that are using Personal Credit scoring system mandatorily. I need you help, please mention the name of the country where it is mandatory (not limited only for credit card but for generally).

Hello Scholars,

Can you please tell me how do I measure whether any country is using (mandatory) personal credit rating? Is there any database that can help to find out the mandatory personal credit rating score?

Regards

Dr. Aziz

Generative artificial intelligence finds application in various spheres of commercial banking, including banking offered to customers remotely through online and mobile banking. In addition to improving remote channels of marketing communication and remote access of customers to their bank accounts, tools based on generative AI are being developed, used to increase the scale of efficiency, automation, intelligent processing of large sets of data and information on various processes carried out inside the bank. Increasingly, generative AI technologies learned in deep learning processes and the application of artificial neural network technologies to perform complex, multi-faceted, multi-criteria data processing on Big Data Analytics platforms, including data and information from the bank's environment, online databases, online information portals and internal information systems operating within the bank. Increasingly, generative AI technologies are being used to automate analytical processes carried out as part of the lending business, including, first and foremost, the automation of creditworthiness analysis processes, processes carried out on computerized Big Data Analytics and/or Business Intelligence platforms, in which multicriteria, intelligent processing is carried out on increasingly large sets of data and information on potential borrowers and their market, competitive, industry, business and macroeconomic environment, etc. However, still the banking system supervisory institutions do not allow changes in banking procedures in which generative artificial intelligence in the credit departments of commercial banks will not only carry out the entire process of analyzing the creditworthiness of a potential borrower but will also make a decision on whether to grant a loan. Banking supervisory institutions still do not allow this kind of solution or precisely it is not defined in the legal norms defining the functioning of commercial banking. This raises the question of whether the technological advances taking place and the growing scale of applications of generative artificial intelligence technology in banking will not force changes in this area of banking as well. Perhaps, the growing scale of implementation of generative AI into various spheres of banking will contribute to the continuation of the processes of automation of lending activities which may result in the future in generative artificial intelligence making a decision on whether or not to extend credit.

In view of the above, I address the following question to the esteemed community of scientists and researchers:

And what is your opinion about it?

What do you think about this topic?

Please answer,

I invite everyone to join the discussion,

Thank you very much,

Best regards,

Dariusz Prokopowicz

7.9.2023 the central bank in Poland, i.e. the National Bank of Poland, despite the fact that still, despite the end of the Covid-19 pandemic more than a year ago, large amounts of additional money are being injected extra-budgetarily into the economy as part of the pre-election government social programs, inflation is still over 10 percent, average wage growth is over 10 percent, the rate of economic growth shows no signs of economic recession, the debt level of the state's public finance system is growing rapidly, oproc. of bank deposits is at a low level that does not even compensate for the level of loss of purchasing power of money, the cost of servicing the public debt is growing rapidly, the national currency is weakening reduced interest rates. by 0.75 percent. Most financial analysts, even taking into account political factors in addition to economic factors, were forecasting a reduction of these interest rates by 0.25 percent, not by 0.75 percent. Besides, this was also based on what the president of the National Bank of Poland said and declared at previous press conferences. Financial analysts economists have already become accustomed to the fact that the declarations made at press conferences by the president of this central bank are determined mainly by political factors, often diverge from the facts, contain inconsistencies with objectively conducted analyses of the macroeconomic state of the economy, and so on. The key issue is that the next parliamentary elections in Poland are scheduled for 15.10.2023. The monetary policy pursued by the central bank in Poland in recent years clearly confirms the thesis of strong informal ties between this policy and the government's economic policy. The covid and postcovid monetary policy pursued since 2020 first contributed to inflation from 2021 due to the strong easing of this policy, and then when it was tightened from October 2021 it acted mainly anti-conjunctural instead of anti-inflationary. The anti-conjunctural effect of the previously tightened monetary policy in Poland was mainly due to the fact that commercial banks operating in Poland for many years have been granting long-term mortgages and business loans at variable interest rates for more than 95 percent of the time. This is a kind of evanescence of banking in Poland compared to other developed countries. Oddly, the forecasting analyses developed at the central bank before the earlier monetary tightening apparently did not fully take into account this important economic factor. This is yet another point supporting the thesis that a highly politicized monetary policy is being pursued in Poland. This then raises the following question: won't a monetary policy conducted in this way, in which economic factors are less important than political factors, soon cause mistakes to be made again when conducting this policy and lead to another crisis in the economy? I, on the subject of monetary policy and its role in the issue of systemic credit risk management and in the context of the emergence of the global financial crisis of 2007-2009, conducted research, the results of which I have published in several scientific articles. These articles are available on my Research Gate portal profile. I invite you to join me in scientific cooperation.

In view of the above, I address the following question to the esteemed community of scientists and researchers:

Please answer,

I invite everyone to join the discussion,

Thank you very much,

Best regards,

The above text is entirely my own work written by me on the basis of my research.

In writing this text I did not use other sources or automatic text generation systems.

Copyright by Dariusz Prokopowicz

On my profile of the Research Gate portal you can find several publications on the problems of monetary policy and its role in the issue of systemic credit risk management and in the context of the emergence of the global financial crisis of 2007-2009. I invite you to scientific cooperation on this issue.

Dariusz Prokopowicz

The bankruptcy of Silicon Valey Bank and Signatire Bank, i.e. banks operating within the framework of investment banking based on equity investments in securities has resulted in investor anxiety, increased levels of uncertainty in financial markets, including equity markets, securities markets. Once again, the question of the possibility of a repetition of the situation of the global financial crisis of 2007-2009 has resurfaced, with central banks intervening swiftly and efficiently to fully guarantee all deposits and bank deposits above the statutory limits set for deposit guarantee institutions. This raises the debatable question of why, 15 years after the global financial crisis of 2007-2009, there are still cases of large investment banks failing when, moments afterwards, the central bank announces the full guarantee of all bank deposits and bank deposits and without quota limits in each of the remaining functioning banks. And this is what happened moments after Silicon Valey Bank and Signatire Bank declared bankruptcy. In addition to this, another debatable issue arises regarding the potential for an increase in the scale of moral hazard in both the commercial and investment banking community as well as in bank customers, which could lead to a significant increase in the level of acceptable investment, credit, liquidity, debt, etc. risks for many businesses. If this were to happen, the result could be an increase in systemic credit risk in the banking sector, which is hardly the purpose of central banking, but rather the opposite. But, on the other hand, some central banks also carry out financial operations on international financial markets, often making substantial revenues and profits. This raises a third debatable issue, which is to consider the key priorities of central banks' activities in addition to looking after the value of money and the stability of the banking system. The central bank's participation in the process of injecting additional money into the economy through the purchase of treasury bonds and carrying out financial operations in the international financial markets, including the foreign exchange markets and with the use of securities to a significant extent can influence the formation of the national currency exchange rate on the one hand and can be a way to generate profits for the central bank on the other. Obviously, the issue of the stability of financial markets, the security of the banking system, the formation of the value of the currency within a certain range, not allowing too high a level of overcredit for investment processes carried out by various economic entities also operating in non-financial sectors of the economy and not allowing too high a level of systemic credit risk in banking are key priorities. These priorities are legally anchored both in the Constitution, i.e. the Basic Law, and in the legal norms defining the functioning of the central bank. Of course, the high-security banking system thus built does not exempt commercial banks and investment banks from the need to continually improve their credit risk management systems. New information technologies and Industry 4.0 are emerging and are also being implemented into banking. New risk factors that are difficult to predict are emerging, such as the occurrence of the SARS-CoV-2 (Covid-19) coronavirus pandemic in 2020. Situations continue to arise where the optimum levels of credit risk are exceeded with regard to the investment banks' equity investments in securities. Consequently, there is still a high degree of possibility that investment banks operating in the capital markets may permanently lose liquidity as a result of certain investment decisions and the quality of the credit risk management improvement process carried out. Also, the banking supervisory institutions, the institutions supervising the financial system should review the issue of the adequacy of the prudential instruments applied by banks, instruments for controlling credit risk, liquidity risk, debt risk, operational risk, market risk, foreign exchange risk, interest rate risk, cyber risk, etc. in view of the changing reality in which banks and the whole banking system operate. It is therefore necessary, in this regard, for banking supervisory institutions, institutions overseeing the financial system, to carry out a kind of ongoing monitoring of the adequacy of the credit risk management systems applied in banks and other risk categories, in order to continually answer the question of whether these systems have become obsolete in the context of the technological progress taking place and the emergence of new risk factors not previously known or not previously present on a large scale in the banks' environment or occurring in their customers. Therefore, both the financial supervisory institutions and the risk management departments of commercial banks, deposit and credit banks and investment banks are once again reviewing the adequacy of the applied prudential and risk control instruments, procedures and credit risk management systems in relation to the situation of the growth of investment and other risks, the possibility of a deepening of the downturn in the economy, in the reality of high inflation, high interest rates, the possibility of stagflation.

In view of the above, I address the following question to the esteemed community of scientists and researchers:

What do you think about this subject?

What is your opinion on this subject?

Please respond,

I invite you all to discuss,

Thank you very much,

Warm regards,

Dariusz Prokopowicz

Some commercial and investment banks are already creating their cryptocurrencies. Some investment funds are also allocating part of their funds for the purchase of certain investment financial instruments and other investment assets as part of building their investment prortfolio to the purchase of selected cryptocurrencies. It may therefore be that in the future, financial or para-financial institutions will be established that will accept selected cryptocurrencies for deposits and, on the other hand, will also lend cryptocurrencies. Related to this issue will be an increase in the level of institutionalisation of cryptocurrency trading platform markets. As part of a potential increase in the level of formalisation of procedures and institutionalisation of markets in which citizens and businesses use cryptocurrencies, supervisory institutions should also be created, thanks to which the level of security of the use of cryptocurrencies should increase and also the level of investment risk of investing in cryptocurrencies should decrease significantly. Thus, with a higher level of security in the use of cryptocurrencies, more citizens will be willing to use cryptocurrencies both as payment instruments and as alternative investment instruments. With certain financial institutions or para-financial firms lending cryptocurrencies in a formula similar to bank lending transactions, the importance of the credit risk management process of cryptocurrency lending will increase. Since new information technologies and Industry 4.0, including artificial intelligence, machine learning, deep learning and analytics conducted on computerised Big Data Analytics platforms, are already being used in the credit risk management process occurring in the context of banks' lending and investment transactions in securities and other capital markets assets, so in the future such new technologies may also be applied to improve the credit risk management processes of cryptocurrency lending.

In view of the above, I address the following question to the esteemed community of scientists and researchers:

What is your opinion on this subject?

Please respond,

I invite you all to discuss,

Thank you very much,

Best wishes,

Dariusz Prokopowicz

On Monday 13.03.2023, the situation shaping the capital markets was influenced by the developing news in many media that one of the largest banks in the USA, i.e. Silicon Valley Bank, had declared bankruptcy. The collapsed SVB bank was taken over by the state-owned Federal Deposit Insurance Corporation (FDIC, Federal Deposit Guarantee Corporation) on Friday 10.03.2023 after the bank was unable to pay out money to customers withdrawing their deposits in a panic. SVB is the 16th largest bank in the US and has served a significant proportion of Silicon Valley startups, companies and funds. Silicon Valley Bank was the largest collapse in the banking sector since the 2008 Lehman Brothers collapse and the onset of the 2007-2009 global financial crisis. At the end of 2022, SVB had more than $209 billion in assets. But the collapse of Silicon Valley Bank (SVB) is not the end of the problems in the financial markets. On Monday 13.03.2023, news hit the media that another bank is failing. Customers worried about their deposits also called many of their other banks to check that their money was safe. This second spectacular failure in the financial system is New York's Signature Bank, which was shut down by state market regulators on Sunday. According to the Reuters news agency, this is the third largest bank failure in US history. It is also another spectacular bankruptcy of a major financial institution overseas in just a few days. New York-based Signature Bank is a US financial institution that, at the end of 2022, had customer deposits worth almost USD 89 billion and USD 110.36 billion in assets. According to published official figures, almost a quarter of these funds came from cryptocurrencies. This raises a key issue to be resolved regarding the extent to which credit procedures and the credit risk management process at financial institutions have improved over the last 15 years, i.e. after the onset of the 2007-2009 global financial crisis. I have described the determinants and root factors of the 2007-2009 global financial crisis, including the mistakes made in credit risk management, in my articles on this issue, which I posted on my profile of this Research Gate portal after publication. I would like to invite those conducting research on this issue to join me in research collaboration on issues and factors for improving the credit risk management process in financial institutions.

In view of the above, I would like to address the following questions to the esteemed community of scholars and researchers:

What do you think about this topic?

What is your opinion on this subject?

Please respond,

I invite you all to discuss,

Thank you very much,

Warm regards,

Dariusz Prokopowicz

For example, lending denominated in foreign currency generates additional currency risk so it may increase the overall level of credit risk compared to lending in domestic currency. In addition, sometimes commercial banks also use abusive clauses in their loan agreements when granting business, investment or mortgage loans in foreign currency, which are the result of unethical business practices by the bank and can result in a strong asymmetry of information between the bank and the borrower, the bank taking advantage of a much weaker negotiating position of its clients and hidden, additional costs being charged to the borrower. Such practices were used by a significant part of commercial banks in Poland in the period of several years just before the onset of the global financial crisis of 2007-2099. At that time some commercial and investment banks predicted the occurrence of this crisis on the basis of an analysis of their lending activity, the determinants of the macroeconomic environment and the situation and changes in trends on capital markets. The banks operating in a developing country such as Poland, a country characterised by its own characteristics, knew that by applying unreliable, unethical business practices towards borrowers, by having incompletely secured credit positions, the highly and historically overvalued market valuations of real estate and securities would soon start to fall, that the trend of several years of a bull market in capital markets would change to a stock market crash, which would result in a significant change in trends on currency markets as well. In contrast, borrowers taking out such mortgages denominated in foreign currencies, especially CHF, did not have this kind of knowledge. This is due to the fact that most borrowers do not deal on a daily basis with the analysis of banks' lending activities, the procedures for examining the borrower's creditworthiness and the bank's credit risk, the problems of credit risk management, both on an individual basis with regard to a single credit transaction and on a portfolio basis, i.e. in terms of managing the credit risk of entire portfolios of loans granted by the bank. Banks, on the other hand, are familiar with this issue because they deal with it on a daily basis and are obliged to do so by banking supervisory institutions. However, apparently these banking supervisory institutions as well as consumer and competition protection authorities, bank arbitrage institutions, central banks, etc. are not able to fully verify on an ongoing basis, as part of their ongoing monitoring, the issue of the integrity of commercial and investment banks' application of banking practices in lending, including the application of business ethics, the non-application of abusive clauses in loan agreements, the application of too much asymmetry of information to customers, the use of their advantage at the negotiating level. In order for these mortgages denominated in a foreign currency, in CHF, to sell well, so banks constructed models for calculating the creditworthiness of a potential, individual borrower in such a way that mortgages granted in a foreign currency turned out to be cheaper for borrowers than analogous loans granted in the domestic currency, i.e. in Poland in PLN. The results of the calculated creditworthiness presented to potential borrowers were such that the calculated creditworthiness for a loan granted in CHF was set at a significantly higher maximum loan amount that could be granted compared to an analogous loan granted in the domestic currency of PLN.

In view of the above, I would like to address the following question to the esteemed community of scientists and researchers:

What do you think about it?

What is your opinion on this subject?

Please respond,

I invite you all to discuss,

Thank you very much,

Best regards,

Dariusz Prokopowicz

Does the application of specific artificial intelligence technologies for the automation of risk analysis processes, the execution of credit scoring processes for potential individual credit transactions, the ongoing monitoring of open credit transactions and the analysis of changes in the level of credit risk significantly allow the improvement of credit risk management processes and the optimisation of credit processes in the context of improving the profitability of commercial banks' lending activities?

Commercial banks operating according to the classic deposit and credit banking model generate revenues and profits mainly from lending activities. On the one hand, the formation of the quality of the bank loan portfolio and the level of financial results are determined by external factors, i.e. the economic situation in the economy, the economic environment of the bank's customers, borrowers taking bank loans and depositors placing their financial surpluses on bank deposits. On the other hand, the efficiency of the lending business and the development of financial results are also influenced by internal factors, which primarily include the efficiency of the credit risk management process. The credit risk management process is carried out on a stand-alone basis in terms of examining the creditworthiness of the potential or current borrower (ongoing monitoring of the loan granted) and the credit risk the bank accepts in the situation of granting a loan. The credit risk management process is also carried out in banks on a portfolio basis with regard to the entire portfolio of loans granted and by type of loan. Both in terms of the individual and portfolio risk management process, banks are seeking to improve and optimise these processes through the involvement of new information technologies and Industry 4.0. Thanks to these new technologies, banks have the possibility to transfer part of their risk management processes to the bank's internal IT systems and to offer loans also and increasingly via the Internet. Loans of relatively low amounts, consumer loans, instalment loans, i.e. mainly granted to the public, and working capital loans to businesses can already be entirely remote communication with the customer via the Internet. In the case of home and business loans, including investment loans, banks require the borrower to provide various business-related documents to carry out a creditworthiness analysis and examine a number of different economic, financial, operational, investment risk factors, etc., which can be used as a basis for the creditworthiness analysis. As a result, the process of granting these types of business, investment and housing loans, which are usually also for relatively higher amounts, is not yet fully feasible via the Internet when the process of granting these loans itself is not expected to generate high operational risks for banks. However, ongoing technological advances may also change this significantly in the future. At present, banks are trying to implement new Industry 4.0 technologies into their lending activities in order to improve and optimise their costs. The use of new Industry 4.0 technologies in banks is also determined by the need to improve computerised cyber-security systems with a view to constantly improving cyber-security. Recently, key Industry 4.0 technologies that banks are implementing into their operations include artificial intelligence, machine learning technology, deep learning, Big Data Analytics, cloud computing, Internet of Things, Blockchain, multi-criteria simulation models, digital twins, etc. Particularly new opportunities arise in terms of improving both remote marketing communication techniques, optimising banking procedures, reducing the scale of the bank's operational risks and also improving credit procedures and the credit risk management process by involving artificial intelligence in the bank's operations.

In view of the above, I address the following question to the esteemed community of scientists and researchers:

And what is your opinion on this topic?

What is your opinion on this subject?

Please respond,

I invite you all to discuss,

Thank you very much,

Best wishes,

Dariusz Prokopowicz

In recent years, on the one hand, unethical business practices and practices incompatible with corporate social responsibility have continued to occur in the intermediation of financial, investment transactions concluded on the capital markets. On the other hand, there are also still situations confirming the thesis that the institutions of financial, banking and capital markets supervision, including stock exchanges, investment funds, brokerage houses and offices, insurance companies, etc., to a limited and incomplete extent reduce the scale of unethical business practices on the capital markets. Could this be a symptom of the impending next global financial crisis? The progressive deregulation and liberalisation of the rules of financial markets since the 1970s, including capital markets, stock exchanges, has generated an increase in risks in these markets and enabled unethical business practices in commercial banks, investment banks, brokerage houses and so on. In addition to this, the increasing scale of the use of insider trading in the context of financial transactions, speculative investments made using securities listed on stock exchanges and other assets, the objects of transactions in the capital markets has increased the scale of the volatility of these markets. The use of unethical business practices in investment banks, brokerage firms, credit advisors in commercial banks providing mortgages ... reduced vigilance in detecting such practices in financial supervisory institutions became some of the key factors in generating the global financial crisis of 2007-2008. Applied short positions to monetise declines in equity valuations, stock indices and other capital market assets. The above-mentioned practices, as well as unreliable credit advice, the granting of mortgages to uncreditworthy individuals and entities, the sale by brokers employed by investment banks of securities highly rated by the banks' cooperating rating agencies, which later turned out to be worthless securities, are important factors that generated the global financial crisis of 2007-2008. Of course, the key underlying factors that generated the global financial crisis of 2007-2008 are not only issues related to financial sector entities serving retail customers, not only to commercially operating financial institutions, investment banks, etc., but also to the financial system. The key factors that generated the global financial crisis 2007-2008 also include systemic factors, i.e. the above-mentioned deregulation and liberalisation of financial markets, the abolition of prudential instruments that were introduced after the Great Depression of the 1930s in order to make the financial system safer and to increase the scale of stability in the functioning of the economy. In addition, just before the global financial crisis of 2007-2008, the central bank pursued an excessively lax monetary policy and an additional governmental institutional guarantee system was created against financial transactions carried out in commercial and investment banks, which were undertaken with the acceptance of ever higher levels of credit risk, ever higher levels of leverage, ever lower levels of collateral for the transactions carried out, etc. In recent years, new financial markets have been developing, such as cryptocurrency markets. In addition to this, there have been situations in which the economic situation on specific capital markets, stock exchanges and cryptocurrency platforms has been influenced by posts and comments made by persons recognised by the media, who are also active on social media platforms, including Twitter tweets, which may have influenced the mood and investment decisions of many social media users and, at the same time, individual investors active on capital markets. On the other hand, there have been many instances of insider trading in capital market transactions. In order for financial markets, including capital markets to operate efficiently and effectively, financial, banking and capital markets supervisory institutions, including stock exchanges, investment funds, brokerage houses and offices, insurance companies, etc., should effectively detect such economic crimes, dishonest actions of some capital markets participants, non-compliance with the applicable legal norms, application of unethical business practices detect and reduce their scale. Financial supervisory institutions should reduce the scale of unethical business practices on capital markets. When financial supervisory institutions function efficiently, financial markets function effectively and financial crises occur less frequently.

In view of the above, I would like to address the following question to the esteemed community of scientists and researchers:

What do you think about this topic?

What is your opinion on this subject?

Please answer with reasons,

I invite you all to discuss,

Thank you very much,

Best wishes,

Dariusz Prokopowicz

The following analysis of the situation applies to the country in which I operate: Despite the National Bank of Poland's November forecasts suggesting an increase in inflation at the beginning of next year, 2023, the Monetary Policy Council has once again, for the third consecutive time (counting October 2022), kept NBP interest rates unchanged. Despite the constitutional provision on the independence of central banking, the NBP's monetary policy is significantly politicized. How politicized it is was evident during the NBP's involvement in the procedure of launching and applying on the largest historical scale since the 1st wave of the SARS-CoV-2 coronavirus pandemic (Covid-19) the monetarist concept of using domestic money as an anti-crisis instrument, thanks to which it was possible to quickly pull the economy out of the recession of the 2020 economy in 2021 (caused mainly by the introduced lockdowns and national quarantines) and thus generate an increase in inflation (mainly core inflation), which began to rise almost from the beginning of 2021, i.e. a year before the outbreak of war in Ukraine. According to the opinion of most economists and financial analysts, the NBP started raising interest rates too late in 2021. Because of this delay and the unreliable information policy regarding the forecasting of monetary policy, many borrowers are currently paying more than double the mortgage and business loan installments. Already, commercial banks are reporting a rapid deterioration in the quality of their loan portfolios due to the increasing number of loans that are not being repaid on time. As the central bank in Poland, i.e. the National Bank of Poland, in the period from October 2021 to September 2022, raising interest rates, significantly tightened monetary policy, so bank loans in the offers of commercial banks have become much more difficult to afford. With the economic downturn forecast for the next quarters, banks are further restricting access to credit by tightening lending policies. The result is a rapidly developing downturn in an increasing number of industries and sectors of the economy. More and more companies and businesses are freezing employee salary increases, announcing job cuts or already implementing them. Apparently, then, the belated and staggered strategy of raising interest rates is not causing a brake on inflation, but is causing more of a deepening of the downturn then the obvious question is to stop raising interest rates. Besides, what's the point of tightening monetary policy if it doesn't work, as the government continues to "sprinkle cash as if from a helicopter" (a reference to Milton Friedman's Helicopter Money) under a still soft fiscal policy and, in addition, conducted under the formula of adding money wherever and however much it can with an eye to political issues and future parliamentary elections (autumn 2023) instead of conducting "spotty" measures according to a social welfare strategy only for people and economic entities that really need this assistance to avoid bankruptcy. After all, the worsening financial problems of many SME businesses are not due to misguided business management decisions only to misguided, haphazard, ad hoc economic policy, including fiscal policy by the government (and monetary policy as well) and due to rising inflation, rising prices of fossil fuels, energy prices, raw materials, prefabricated goods, etc. The worsening energy crisis is also an offshoot of the government's indolence, ignorance, negligence, etc. over the 7 years (but also before that) of the necessary green transformation of the economy, including the development of renewable energy sources, nuclear power, etc., that is necessary to carry out. And the cost of these mistakes made in unreliable energy, climate, environmental policies will increase in the years to come due to CO2 emission fees. And who will pay these rising costs of the mistakes made in chaotic economic policies? As usual, these costs are passed on to the public.

In view of the above, I address the following questions to the esteemed community of scientists and researchers:

What is your opinion on this topic?

Please answer,

I invite everyone to join the discussion,

Thank you very much,

Warm regards,

Dariusz Prokopowicz

Improving bank credit risk management is particularly important to reduce the scale of the share of bad loans that are not repaid on time, deteriorating loan portfolios, including paracredit products in commercial banks, including investment banks investing in securities and other speculative investment assets. Thanks to the efficient process of improving bank credit risk management, the scale of financial and economic crises is also reduced. How important it is to improve bank credit risk management and reliably carry out credit risk management, reasonably carry out bank lending, carry out banking in accordance with the principles of business ethics, respect bank customers, apply the principles of corporate social responsibility, shape a high level of good reputation of financial institutions, maintain a high level of public confidence in banks and other financial institutions, etc. this has been shown by the global financial crisis of 2007-2009. Breaking the above-mentioned principles and failing to follow good practices, ignoring the issue of sound application of credit risk management principles leads to serious crises in the financial system, bankruptcy of banks and, consequently, economic crises. On the other hand, in recent years, the greatest number of threats to banking have emerged from the Internet, i.e., the environment in which online and mobile banking is developing. Also during the pandemic of the SARS-CoV-2 coronavirus (Covid-19), due to the strong increase in the scale of e-commerce, online payments and settlements, the scale of development of online banking and also the scale of cybercrime increased. As a result, the importance of banking cybercrime risk management is growing in banks, and the scale of allocating a portion of banks' surplus funds to secure financial transactions, transfers, payments and settlements made remotely through online and mobile banking is increasing. I researched the issue of credit risk management, bank lending procedures, the importance of an effectively conducted credit risk management process, the mistakes made in this regard, i.e. unreliable implementation of the credit risk management process in banks, violations of business ethics and good banking practices, leading to the global financial crisis of 2007-2009. The results of my research are included in publications on the issues of credit risk management, bank lending procedures, the methodology of assessing the creditworthiness of potential borrowers and credit risk of the bank, the scoring method of assessing the creditworthiness of customers and credit risk, the origins of the global financial crisis 2007-2009, etc. can be found in the publications I have posted on my profile of this Research Gate portal. I am currently conducting research in the field of benchmarking on the comparison of procedures, instruments, systems, etc. for credit risk management and cyber risk management. I invite you to cooperate with me on this issue. I request the results of the analogous analyses and studies conducted.

In view of the above, I address the following questions to the esteemed community of researchers and scholars:

What is your opinion on this issue?

Please answer,

I invite everyone to join the discussion,

Thank you very much,

Warm regards,

Dariusz Prokopowicz

Prior to the Great Depression known as the Great Depression of the 1930s, the Federal Reserve Bank raised interest rates. When commercial and investment banks also raised interest rates at that time, the result was a significant decline in borrowers' creditworthiness. There was a crash in bank lending in the form of loans. There was a decline in investment, income, consumption, production, income growth, etc. Unemployment increased. There was a stock market crash on the New York Stock Exchange, which became a symptom and an additional factor in the development of a deep economic crisis. The result was a strong increase in unemployment and the pauperization of societies in many countries, including developed countries. The Great Depression of the time may also have been a significant factor in the emergence of negative public sentiment, a change in policy in Europe and the outbreak of World War II. The negative effects were many, and it was only the anti-crisis, Keynsian economic program based on activating demand through new publicly funded investments that pulled economies out of the crisis lasting several years. Years later, it was recognized that raising interest rates by the central bank in a situation flowing from the economy with symptoms of an impending crisis, instead of helping the economy it exacerbated the impending economic crisis. The prevailing opinion among economists at the time was that the central bank had misread those first symptoms of an impending economic crisis.

In contrast, prior to the global financial crisis of 2007-2009, the Federal Reserve Bank kept interest rates low for several years. Loans offered by commercial banks became cheaper. In addition, a system was created to provide systemic protection against banks, a system of government guarantees for any increase in systemic credit risk. The result was an increase in the sale of mortgages based on funds raised from subprime bonds for citizens who were not creditworthy. Rating agencies attached to investment banks issued the highest AAA recommendations for those investment financial instruments that contained already defaulted loans, i.e. bad loans. This led to the appearance of symptoms of the economic and financial crisis already in mid-2007. Real estate prices, instead of continuing to rise, began to fall, unemployment began to rise, and a significant portion of mortgages stopped being repaid. When the world's fourth-largest bank Lehman Brothers declared bankruptcy in mid-September 2008, there was another wave of stock market repricing. This date was symbolically considered the beginning of the global financial crisis, the biggest financial crisis in the world's economic history. As part of the anti-crisis measures, a large amount of additional money was pumped into the banking system to limit the scale of the decline in commercial bank lending, in order to maintain liquidity in the banking sector. As a result, it was possible to limit the scale of the developing financial crisis.

In view of the above, sound monetary policy-making by the central bank is an important anti-crisis or pro-crisis factor in the economy. I investigated the sources of the global financial crisis through the prism of the credit risk management process in commercial banks and in the context of central banks' monetary policies. I have posted the conclusions of my research in publications on this issue, which, after publication, I also posted on my profile of this Research Gate portal. I invite you to join me in scientific cooperation on this issue.

In view of the above, I address the following question to the esteemed community of researchers and scholars:

What is your opinion on this issue?

Please answer,

I invite everyone to join the discussion,

Thank you very much,

Best wishes,

Dariusz Prokopowicz

In recent years, commercial banks have been providing financing in the form of loans for pro-environmental, pro-climate, green investment projects and/or for the development of sustainable economic activities. Such credit offerings by commercial banks are referred to as green loans. Since in recent years the issue of the climate crisis is becoming one of the key topics and influential factors vis-à-vis the future development of civilization, so the scale of pro-environmental and pro-climate awareness of citizens is growing. More and more companies and enterprises are adding to their missions and development strategies the issue of achieving certain sustainable development goals and implementing pro-environmental business ventures. More and more economic entities are complicit with their green business in the issue of carrying out a pro-environmental and pro-climate transformation of the classic growth, brown, linear economy of excess to a sustainable, green, zero-carbon zero-growth and closed-loop economy Commercial banks have been building and improving their credit risk management procedures for many years, in Poland since about the mid-1990s, including procedures for analyzing the creditworthiness of potential borrowers applying for a bank loan and analyzing the credit risk taken by the bank in the situation of granting a loan. However, the growing pro-environmental and pro-climate economic activities, green investments, green businesses, green finance, green credit is a relatively new issue in Poland. Pro-environmental and pro-climate business ventures have been developed in Poland for a short time and are still a small part of the overall economy. Pro-environmental and pro-climate transformation ventures in the energy sector, including primarily the development of renewable and emission-free energy sources, have been developing particularly slowly in Poland over the past few years. The policy of blocking the development of renewable and zero-emission energy sources and the small relative to the possibilities financial subsidies offered to citizens under government public assistance programs have led to a low scale of green energy transformation, a high share of dirty combustion energy in the energy source mix, a low level of energy security and a high scale of negative effects of the energy crisis in the country. As a result, commercial banks in recent years have begun to offer green loans, with the help of which borrowers implement pro-environmental, pro-climate, pro-environmental business ventures within the framework of their chosen new strategy and mission, according to which they conduct green business, pursue sustainable development goals and their business activities are characterized by pro-environmental corporate responsibility. In terms of banking credit risk management procedures, a particularly important issue is the measurement of risk, the analysis of individual impact factors, the probability of their occurrence, the scale of negative impact on the borrower's enterprise, the scale of impact on the finances of the business entity, etc. Considering the implementation of pro-environmental, pro-climate, green investment projects, banks should also take into account new risk categories related to the specifics of sustainability, pro-environmental, etc. of green business ventures and investment projects. When new green technologies and eco-innovations are applied to investment projects, new categories of operational and other risks emerge. Various categories of environmental risks may be taken into account and arising from the ongoing process of global warming and the various negative effects of climate change taking place, as well as increasing levels of environmental pollution, dwindling supplies of clean water, increasingly severe periods of drought, etc. Such new categories of risk in a situation of high levels may cause the bank to change its credit policy and no longer lend to certain types of business ventures. For example, in some countries, commercial banks avoid lending to tourist companies operating in the mountains, hotels, restaurants, companies operating ski lifts and ski slopes due to the falling scale of snowfall in the winter. On the other hand, the emergence of new risk categories can be an important factor in the changes made in the credit risk management process, including those relating to green lending activities.

In view of the above, I address the following question to the esteemed community of researchers and scientists:

What is your opinion on this issue?

Please answer,

I invite everyone to join the discussion,

Thank you very much,

Best regards,

Dariusz Prokopowicz

Business analytics, financial analysis, organisational management systems, decision support systems, risk management systems, etc. have been improved in recent years through the implementation of new ICT, Internet and Industry 4.0 information technologies. However, to what extent does the application of new ICT, Internet and Industry 4.0 information technologies in the aforementioned systems of performed analysis, management, etc. generate efficiency gains in the operation of these processes? How and to what extent are risk management systems improved through the application of new ICT, Internet and Industry 4.0 information technologies? Which of the applied ICT, Internet and Industry 4.0 information technologies have contributed the most in terms of increasing the effectiveness of the implementation of risk management processes?

What do you think about this subject?

Please reply,

I invite you all to discuss,

Thank you very much,

Regards,

Dariusz Prokopowicz

The global financial crisis of 2007-2009 was the result of a number of factors that started as early as the 1990s and were then compounded at the beginning of the 21st century. Many mistakes were made at the time, both at the level of monetary policy, in terms of over-liberalisation of the functioning of financial markets and banking entities (in the mid-1990s, the separation of the functioning of deposit and loan banking from investment banking was abolished). Allowed to grant mortgages to uncreditworthy citizens. The missing funds for granting bad loans, i.e. loans that in 99 per cent probability would not be repaid on time, were no longer obtained from bank deposits but from derivative securities issued for this purpose, which were sold as subprime bonds to successive investment banks as secure and profitable investment financial instruments. Credit rating agencies gave these credit derivatives the highest AAA ratings, which just before the onset of the global financial crisis was no longer factually correct and was a clear example of a breach of good business ethics. There was also a high level of systemic credit risk arising from the underwriting of many of the thus unreliable mortgages by a small number of commercially operating insurance companies. There has been a lot of unreliability, the application of unethical business practices in credit risk management both at a systemic level and at the level of individual banking entities. The credit risk management process in investment banks at the beginning of the 21st century was not working efficiently and effectively. The banking procedures were not adequately adapted to the current realities of the technological advances taking place and new financial instruments, derivatives being created in a highly liberalised prudential standard of credit risk control. I have researched this issue and described these issues in publications that are posted on my profile on this Research Gate portal. I had researched the issue of improving the credit risk management processes carried out in commercial banks even before the global financial crisis of 2007-2009. Some procedural and normative issues have been corrected but rather not all, which should be corrected so that a similar financial crisis does not occur again in the future.

In view of the above, I address the following research question to the esteemed community of researchers and academics:

What is your opinion on this subject?

Please reply,

I invite you all to discuss,

Thank you very much,

Best wishes,

Dariusz Prokopowicz

To what extent does green lending by banks contribute to the development of pro-environmental, pro-climate, sustainable business ventures?

Are commercial banks that advertise themselves as green banks conducting sustainable banking with a portfolio of banking products really green banks?

Do commercial banks that have added sustainability, climate protection and planetary biosphere protection issues to their new development strategy and/or bank mission promoted in the media really provide many green loans that finance real pro-climate, pro-environmental, sustainable economic ventures conducted by borrowers?

Have the credit risk management procedures resulting from green lending been adequately adapted to the ongoing process of global warming, climate and biosphere change and other impacts of this process?

When assessing the creditworthiness of entrepreneurs planning to realise viable pro-climate, pro-environmental, sustainable business ventures, do banks take into account the issue of the risk of climate change and the specific impacts of this process that may affect the green investment planned for implementation?

How do commercial banks advertising themselves as green, sustainable banks improve their lending procedures and green credit risk management process?

What do you think?

What do you think about this topic?

Please reply,

I invite you all to discuss,

Thank you very much,

Regards,

Dariusz Prokopowicz

Commercial banks, as part of their credit risk management, carry out, as part of their standard credit procedures, an examination of the potential borrower's creditworthiness or the potential borrower's business entity's creditworthiness and the credit risk it will accept when deciding whether to grant a loan. In view of this, and given the growing importance of green loans in commercial banks' loan offers, I address the following questions to the esteemed community of researchers and academics:

Do commercial banks granting green loans take into account potential, prospective, future, negative effects of climate change, including the effects of the progressive process of global warming, which will affect the credited pro-environmental economic undertakings to a certain extent and in a certain character, in their credit risk management process prior to the possible granting of a loan?

How is green credit risk measured, analysed, controlled? On what assumptions are the green credit procedures based? Is the credit risk management process different from the green credit risk management process carried out in commercial banks providing green loans?

If the state provides guarantees and/or subsidies for green loans, does the level of green credit risk decrease significantly since such public financial support makes these loans more accessible?

What is your opinion on this?

What is your opinion on this topic?

Please reply,

I invite you all to discuss,

Thank you very much,

Warm regards,

Dariusz Prokopowicz

Since the commodity crisis of the 1970s, financial markets have been deregulated in many respects. The Bretton Woods international monetary system based on USD dollar parity collapsed (gold parity for the USD dollar was abolished). In the 1990s, many issues of the operation of deposit-credit commercial banks and investment banks were deregulated again.

It was made possible for the two types of banking to merge. This had its effects in generating the global financial crisis of 2007-2009. Due to the deregulation of financial markets, systemic credit risk increased significantly. The importance of improving the credit risk management process implemented in financial institutions, including commercial and investment banks, also increased. In many countries, the practice of money printing without coverage of manufactured products was practised, leading to increased inflation and, in some countries, to the occurrence of hyperinflation. Too low interest rates and government guarantees and other elements of a soft monetary policy led to too cheap money, too high a level of credit for economic activity and too high a level of credit risk, a decline in the repayment of bank loans and, as a consequence, to financial, economic and debt crises, etc. Derivatives specifically generated for this purpose, including credit derivatives such as subprime bonds, CDOs, etc., sold by investment banks to successive investors to generate additional money for unreliably (with practically no credit checks) granted mortgages, led to the major global financial crisis of 2008 in 2007-2009. I have been researching this issue. I have included the conclusions of my research in articles which, when published, I posted on my profile of this Research Gate portal. I invite research collaboration. I would like to hear your views on this issue.

In view of the above, the following question is topical:

What do you think about this topic?

Please reply,

I invite you all to discuss,

Thank you very much,

Greetings,

Dariusz Prokopowicz

What kind of scientific research dominate in the field of Improving credit risk management?

Please, provide your suggestions for a question, problem or research thesis in the issues: Improving credit risk management.

Please reply.

I invite you to the discussion

Thank you very much

Best wishes

What kind of scientific research dominate in the field of Credit policy of commercial banks?

Please, provide your suggestions for a question, problem or research thesis in the issues: Credit policy of commercial banks.

Please reply.

I invite you to the discussion

Thank you very much

Best wishes

In many countries, a strong correlation was found between the change in the economic and financial situation of enterprises and the credit policy of banks.

The research shows that there is a dependency, correlation between the change in the rate of economic growth of the country, economic and financial situation of economic entities, citizens 'incomes, enterprises' investment, investment risk, liquidity risk, debt, creditworthiness, creditworthiness of enterprises, etc. and the changing the credit policy of commercial banks that provide corporate loans and consumer loans to citizens.

However, in recent years, especially before the emergence of the global financial crisis in 2008, it was possible to diagnose a reverse correlation, i.e. that banks, mainly investment banks in low interest rates activated the entire banking sector, including primarily retail commercial banking to provide subsequent mortgage loans even for borrowers no longer possessing creditworthiness. Credit rating agencies issued the highest AAA recommendations for the loan packages sold, most of which were of low quality and low creditworthiness. Insurance companies insured transactions of very high credit risk. Acting on behalf of banks, the media published articles suggesting a good prospect of economic development, a continuation of good economic conditions, including the real estate market, a further rise in property prices. Many financial institutions, media institutions and investment firms participating in this procedure commonly used unethical business practices.

In the light of the above, the following questions arise:

How should banking procedures be improved to prevent future use of such type of unethical business practices?

How should the processes of improving bank credit risk management be carried out in commercial banks, so that more such situations will not happen again, in order to avoid this type of another global financial crisis?

How strong can be the impact of the banks' lending policy on the situation in the construction sector?

In view of the above, is this impact not too strong in periods of high economic growth, ..., in periods of too high economic growth, overinvested investment projects financed mainly by loans and overvalued securities on stock exchanges?

Please reply

Best wishes

How would you rate the activation of commercial banking loans, i.e. an attempt to stimulate economic activity and economic growth of the country through the policy of low central bank interest rates?

Under what economic conditions such a monetary policy may be conducted so as not to over-invest economic processes, i.e. not to overly high the level of investment processes and acceptance, most business entities have too high levels of investment risk and too high levels of credit risk by banks commercial?

How should the process of managing systemic risk in the central bank be improved and how should the process of credit risk management be improved in commercial banks so that no further financial crisis is generated?

I have answered these questions in my scientific publications whose links I have posted below.

In view of the above, inviting you to discuss the above issues, I am asking you the following question:

Please reply

I invite you to discussion and scientific cooperation

Dear Friends and Colleagues of RG

I invite you to discussion and cooperation.

Best wishes

In my opinion, the monetary policy coordinated by central banks can not be objectively assessed without taking into account many specific, current determinations describing the condition of financial markets, the issues of financial risk management instruments applied, the condition of the economy and many other macroeconomic factors. The analysis of a particular monetary policy should take into account the dynamic approach of many variables, including cyclical fluctuation reflected in the changes of many economic categories on the financial markets and in the entire economy. A specific monetary policy may be interpreted and evaluated differently depending on many factors surrounding the condition, financial markets and the economy. In support of this thesis, I cite the following various situations surrounding the banking system and the condition of financial markets and the macroeconomic situation in the context of the cyclical nature of the economy:

1. The process of cyclical development of the national and global economy in a multi-annual perspective, which does not develop fully objectively and independently, is only coordinated by actively pursued economic policies in individual countries, primarily through fiscal and financial policy. To this should be added the issue of the growing importance of central banking in banking systems since the 1970s and the processes of globalization, deregulation, liberalization of transactions and the operation of financial markets, applied security instruments and credit risk management, including capital markets.

2. The impact of monetary policy on central banking on economic processes, when this policy is used, for example, to stimulate economic growth in the deep recession of the economic cycle of the entire national economy, in other words, as has been used many times in many countries since the 1970s. also after the appearance of the global financial crisis in September 2008. Initially, the Federal Reserve Bank in the USA applied such an interventionist anti-crisis solution, and then the European Central Bank in the European Union applied analogous interventionist anti-crisis programs. thanks to this, restoring the balance in the economies and restoring economic growth has worked more effectively and faster than if these interventionist anti-crisis programs were not applied.

3. Long-term, the same, analogical, similar to the same formula, the same goals and directions of action, such as monetary policy co-ordinated by a large central bank, which is also of international importance due to the importance of the US economy, ie monetary policy shaped by the Bank Federal Reserve in the USA. This has been the case since the 1990s until the global financial crisis in 2008. Consequently, this particular policy of the Federal Reserve bank before 2008 was considered by many economists to be incorrect, too low interest rates were maintained for a long time, which enabled commercial banks to broaden the liberalization of lending policy, which resulted in granting these loans to persons without creditworthiness when there were no reliable borrowers and the home sales market was growing, prices of real estate and securities on stock exchanges continued to grow speculatively, despite the fact that they were highly overvalued.

In connection with the above, in the current economic reality it is not practically justified to assess the dominant models of applied monetary policies in universal, timeless terms, detached from the specific economic conditions of a given country, from a specific moment in the business cycle, from specific standards of the institution's supervision of the financial system, on the specific quality of the effects achieved in the area of ??the security of the financial system being a derivative of the application of specific solutions and system prudential instruments in the credit risk management process, etc.

On the other hand, it is justified to make objective, scientifically verified assessments of the dominant models of applied monetary policies, but for a specific economic situation, for a given country, for a specific examined and posted financial system functioning in a specific economy, at a specific moment, phase of the economic cycle of the national economy, global situation, specific situation on the capital markets, the level of valuation of securities on stock exchanges, applicable standards and instruments for the security of the financial system, including the effectiveness of supervision institutions over the financial system, including banking, situtions on credit markets, specific scientifically tested and defined standards for the use of bank loans, i.e. level of credit risk for the majority of credit transactions, etc.

Do you agree with me on the above matter?

In the context of the above issues, I am asking you the following question:

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Thank you very much

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The improvement of specific risk management systems is particularly important in many areas of functioning of commercial business entities, financial institutions, public institutions as well as conducting investment, research and other projects.

How important is this is, for example, the global financial crisis that appeared in mid-September 2008, when specific financial, investment and credit risk management systems were not properly improved and the procedures of investment activity, including credit, were not carried out reliably, as well as customer service, and violation of business ethics in investment banks operating at the time and many other types of financial institutions and business entities.

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Dear Colleagues and Friends from RG

I invite you to discussion and cooperation.

Thank you very much

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For Loss Given Default (LGD) and Exposure at Default (EAD) models what are the types of regression techniques we can use (as part of Credit Loss Forecasting or Credit Loss MOdelling or Expected Loss (EL)) ? I know that Beta Regression is one of the methods that can be used. Apart from that can we use other method?

Are sources of global or national financial, economic, debt, monetary and financial crises described and explained in recent years in scientific publications taken into account in financial supervision institutions in shaping prudential instruments, improving financial system security systems in order to increase this level of security and reduce risk potential future occurrence of similar, similar financial and economic crises, etc., thus improving the sustainable economic development of the country and the global economy?

Do you know examples of countries in which in recent years institutions of supervision over the financial system while shaping prudential instruments, improving financial systems security systems took into account the sources of global or national financial, economic, debt and monetary crises described and explained in recent years in scientific publications e.t.c.?

What types of prudential instruments, instruments of the process of improving financial risk management, including credit, liquidity, currency, debt or other, operational, market, etc. were improved by financial supervisors after the global financial crisis in 2008, which were proposed in the last years in scientific publications?

Is the importance of improving the credit risk management processes in financial institutions growing due to the continuation of processes and market situations occurring on financial markets, including capital markets, stock exchanges, used business practices in investment banking, forecasted decline in the global economic growth rate in 2019, emerging considerations about the subsequent re-evaluation of securities valuations, etc.?

Please, answer, comments.

I invite you to the discussion.

Best wishes

What kind of scientific research dominate in the field of global financial crisis?

In my opinion, globalization is leading to the Integration of Business Cycles.

In this way, globalization may deepen economic crises, including the global financial and debt crisis. An example was the global financial crisis, which appeared in mid-September 2008.

At that time bankruptcy was announced by one of the largest investment banks in the world.

As a result of unreliable credit risk management procedures, billions of USD of financial losses have been generated.

It turned out that the unwritten rule no longer works, that "big can not fall". However, it is the emergence of ever larger international corporations and financial institutions that is one of the main determinants of the processes of economic globalization that have been progressing in recent years these processes continue.

(The continuation of these considerations can be found in the comments below).

Do you agree with my opinion?

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I conduct research in key aspects of this issue. The results of these tests are described in the following publications:

I invite you to discussion and cooperation.

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Will the development of data processing technology accumulated in the Big Data banking database systems improve the credit risk management process or will it contribute to the development of Shadow Banking and the use of unethical practices for the surveillance of potential borrowers?

Large commercial banks generate high financial surpluses allowing for the implementation of modern integrated teleinformatic internet banking systems, Business Intelligence data analysis systems, data processing platforms in Big Data database systems, etc.

There were already situations of unethical use of modern ICT solutions, analysis of comments on social media portals, during which the bank verified the customer's data entered into the loan application by also scanning information that the potential borrower types in social media portals.

This informal verification took place without the knowledge of a potential borrower and could then be the basis for suing the bank.

However, the bank's client is not always aware of the fact that it can be invigilated in such a way by the public trust institutions that the bank should be.

Of course, these types of cases, which we know from the media is supposedly a margin of entire banking, which can be one of the categories of a new type of unethical practices typical of the so-called Shadow Banking.

However, only part of this type of information gets to the media.

Maybe this is just so-called "the tip of the iceberg" of this problem.

The situation is similar in the situation of cybercriminals' attack on bank IT systems or electronic banking platforms.

If it is possible to keep this type of events secret, then customers do not find out about it.

This is because media only receive information about some of these types of events.

Does any of you conduct research in this area?

If so, I invite you to cooperation.

I am asking for comments

Taking into account the situation on financial markets, including capital markets, i.e. high valuations of securities quoted on these markets and factors of production, globally occurring economic processes and the development of mobile electronic banking, the conditions of functioning of commercial banks, including banks operating in the classic model, change deposit and credit banking as well as investment banking.

In recent years, these banking and ICT developments have been dynamically developing and influencing the development of modern commercial banking. Key risk factors and their relative potential impact on the functioning of banks change as well. The role of, for example, the risk of information systems used by banks to conduct electronic online banking, including mobile banking, is growing. In risk management processes, the importance of the portfolio approach and integrated risk management is increasing.

The significance of individual risks, including, for example, credit and operational risk, financial liquidity, debt, interest rates, currency and system risks, new categories of data transfer risks over the Internet and risks related to the activities of investment banks on capital markets may change relative. These changes are important in terms of improving the management processes of individual risk categories and allocating specific resources to improving the instruments of analysis, identification, quantification, control and development of security tools, preparation of a certain amount of provisions to secure the potential materialization of specific risk categories.

Do you agree with my opinion?

In the light of the above, I am addressing you with the following op:

In what direction is the process of improving risk management at commercial banks heading?

Which risk categories are currently considered the most important and the management processes defined as key risk categories in commercial banks are improved?

Has the improvement of the market and operational risk management process, the risk of IT systems and data transfer on the Internet been recognized in recent years as more important than the management of classic banking risk categories, eg credit risk and liquidity risk?

Did the sources of banking risk growth or risk factors, which materialized mainly in investment banking operating on capital markets and led to the global financial crisis of 2008, confirm the change in approach to analysis and management of individual risk categories?

Please reply

This issue is described in the following publication:

I invite you to discussion and cooperation.

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Taking into account the specific nature of financial activities, including the lending activities of banks and other financial institutions and the growing importance of online banking security and increasingly common IT systems and computerized advanced data processing in Internet information systems, connected to the internet database systems, data processing in the cloud, getting the wider use of the Internet of Things, etc., the following question arises:

What are the common features between managing financial risk and IT risk management?

Please reply

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Do you know scientific publications describing the methodologies of the analysis of development potential and creditworthiness for investment projects planned for implementation by an innovative start-up?

Please reply

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In recent years, in financial institutions, but also others, more and more funds are spent on building information security systems and improving IT risk management processes and information transfer on the Internet. In banks, improvement of IT systems risk management and information transfer processes on the Internet is treated as just as important as the management of classic banking and financial risk categories, such as credit risk management.

Do you agree with my opinion on this matter?

In view of the above, I am asking you the following question:

Please reply

I invite you to the discussion

Thank you very much

Best wishes

The basic data used to determine the effectiveness of commercial banks are included in the banks' financial statements. these data relate to the bank's involvement in specific active transactions, necessary to determine the quality of the loan portfolio, to determine the quality of credit, operational, liquidity, debt, operational risk management processes, etc. An IT risk analysis should be added to this. In addition, financial statements also include data to calculate the deposit security ratio, profitability of individual categories of assets and use of available financial resources. This type of data should be combined with individual categories of estimated risk levels measured in correlation to the involvement in individual active operations. However, in the case of the analysis of the investment bank's effectiveness, it should additionally include an analysis based on risk assessment models for investment in derivatives and other capital market instruments. In this regard, many banking procedures were previously unreliably carried out which generated very high levels of credit risks and caused huge financial losses, eg in the Lehman Brothers investment bank, bankruptcy of this bank and the beginning of the global financial crisis in mid-September 2008.

I researched this problem and in my publications I confirmed that it is possible to combine the question of the reliability of banking procedures implemented in the area of risk management with sources of financial crises.

However, I would like to hear your opinion on this matter.

In view of the above, I am asking you the following question: Is it possible to combine the ethics of banking procedures in the field of banking operations with the sources of financial crises?

Please, answer, comments. I invite you to the discussion.

Are credit rating agencies currently reliably assessing the creditworthiness of national economies, enterprises and financial institutions, including issuers of securities?

One of the factors that generated a high scale of negative aspects of the global financial crisis in 2008 was the practice of unreliably carried out assessments of the creditworthiness of national economies, enterprises and financial institutions, including issuers of securities and certain financial instruments offered to individual clients by commercial banks. Have the financial supervisory authorities developed effective instruments to enforce the reliability of credit risk analysis procedures in investment banks and rating agencies? Do financial systems work more effectively than in 2008? Do credit rating agencies reliably carry out an assessment of the creditworthiness of national economies, enterprises and financial institutions?

Please, answer, comments.

I invite you to the discussion.

Best wishes

Dear Friends and Colleagues of RG

Please provide links to the results of the study, which will answer the following question:

How strong is the correlation between the change in the economic and financial situation of enterprises and the credit policy of banks?

Have you studied the correlation between the change in the rate of economic growth of the country, economic and financial condition of business entities, income of citizens, corporate investment, investment risk, liquidity risk, debt, creditworthiness of enterprises, etc. and the changing lending policy of banks commercial enterprises that provide business loans and consumer loans to citizens?

Do you think this correlation is correct? Is the scope of this correlation correct as compared to other determinants of the changing lending policy?

What significance is assigned to this correlation in the context of the processes of improving bank credit risk management in commercial banks?

Please reply

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Do the results of conducted analyzes using Big Data database technologies and Business Intelligence analytics enable improving the accuracy of conducted economic and financial analyzes and other analyzes of the fundamental analysis type and other analyzes of economic effectiveness, economic and financial situation, property valuation, determining the development perspectives of enterprises and improvement of credit risk management processes?

In the context of the above discussion, another question arises:

- Is it possible to improve the credit risk management processes as a result of the use of Big Data database technologies and Business Intelligence analytics for fundamental analysis and other analyzes regarding the economic performance research, economic and financial situation, property valuation, determining business development perspectives?

- Do the results of conducted analyzes using Big Data database technologies and Business Intelligence analytics allow to improve the accuracy of conducted analyzes and increase the probability of prediction, forecasted phenomena and economic processes occurring?

Do you agree with my opinion on this matter?

In view of the above, I am asking you the following question:

Please reply

I invite you to the discussion

Thank you very much

Dear Colleagues and Friends from RG

I invite you to discussion and cooperation.

Thank you very much

Best wishes

In a situation where the amplitude of short-term strong changes in valuations of securities, including shares and bonds on securities markets, is increasing, the situation of extreme reappraisal of these valuations is more frequent and the risk of a spectacular, sharp discount, bear market and stock market crash increases. And such violent stock market crashes began with major financial and economic crises.

The largest economic crises lasting a few years were the source of many negative macroeconomic processes, decline in host growth, consumption, investment, and an increase in unemployment. There were large social costs, productivity dropped, tax revenues to the state budget, the state of public finances deteriorated.

Paradoxically, in the situation of increased financing needs for new development projects, which should restore optimal economic growth, in the situation of an economic crisis, the possibilities of financing new investment projects based on public funds were decreasing. The source of this type of economic crises is the lack of a full correlation between the valuation of assets on stock exchanges and the processes of productivity and consumer demand for manufactured economic goods.

In addition, after analyzing the sources of the global financial crisis of 2008, the erroneously pursued monetary policy by the largest central banks, including in particular the Federal Reserve Bank, is added to the sources of this largest financial crisis in the history; moral gaming practiced by investment banking trading in securities used to finance mortgage loans for borrowers without creditworthiness; imperfect credit risk management systems for derivatives or unreliable practices, non-compliance with security procedures for credit risk analysis and control, and many other factors in investment banking.

Do you agree with me on the above matter?

Please reply

I invite you to the discussion

Best wishes

Is the risk of online banking systems currently treated in banks as more important than the classic categories of banking risk, such as credit risk? Do the IT risk management processes of online banking currently absorb significantly more expenditure on improving credit risk management systems?

Please, answer, comments.

I invite you to the discussion.

Best wishes

Have the credit risk management processes been improved in banks to the extent that the probability of the emergence and scale of the next financial crisis are low?

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