The Effect of Internal and External Factors on Credit Risk : A Study on Shawbrook Bank Limited in United Kingdom

Shawbrook Bank Ltd is a commercial bank serving wide range of savings and lending products to their customers especially small and medium enterprises. Therefore, credit risk associated with the loans is high. The purpose of this study is to study the effect of internal factors, external factors and both internal and external factors on the credit risk of Shawbrook. The study is done by investigating the annual reports from 2015 to 2019. This study used multiple linear regression model to analyze the data. The findings show that GDP growth is the most significant variable to the credit risk of the bank. The bank should have prepared well even when the economic is good. Since economic recession is unavoidable, Shawbrook must maintain minimum capital to absorb the loss during economic recession.