A CONCEPTUAL MODEL OF CREDIT SCORECARD IN PRODUCTIVE LOAN

Abstract

This study is aimed to discuss variables involved in credit scorecard assessment for granting agricultural credits. To get the variables, authors approached with the synthesizing method or Knowledge Synthesis Method from 25 papers related to the credit scorecard development in SMEs and Agriculture. This study used 5 C’s of credit concept to group related variables and eliminated which are not. It is found that from the five aspects of 5C’s, the character aspect consists of management, relationship, credit history, good corporate governance (GCG), behavior, and innovation. The capacity aspect consists of liquidity, profitability ratio, indebtedness degree, repayment history, activity ratio, financial growth, and expense ratio. The capital aspect consists of one indicator, namely capital structure. The conditioning aspect comprises of external factors of PESTEL, industry, and scope of a region in terms of monitoring. The collateral aspect consists of one indicator, which is a guarantee. All of these indicators will be a basic determinant of variables to appraise credit risk quality of a borrower in the agriculture sector. The limitation of this study is the scope limitation of conducting literature synthesize in particular papers which are related to appraising borrowers who are proposing productive loan, particularly in SMEs and the agriculture sector. The finding of this study will be useful for financial institutions that are responsible for developing assessments for borrower candidates in SMEs or the agriculture sector. Further process of research is eligible to be conducted, either qualitative or quantitative, in order to validate and improve the findings in this paper.