Title

The Relative Importance of Financial Statement Items for Lending Decisions

Document Type

Article

Publication Date

4-2005

Department

School of Business

Abstract

Loan officers examine a variety of information when considering loan applications. The purpose of this paper is to determine the relative importance of accounting information during loan application evaluations. Professional loan officers and students were asked to rank thirty portfolios, based on six criteria, on their likelihood of receiving a loan. Three of the criteria are non-financial statement items while three criteria are derived from financial statements (ratios). Judgment analysis reveals that the loan officers and the novices deem credit history, a non-financial statement item, as the most important item when evaluating loan applications. Interestingly, the least important item is the type of audit opinion the loan applicant received.

First Page

145

Last Page

158

Volume

13

Issue

1

ISSN

10935770

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