Bank financing decisions by Angolan banks: the case of Banco de Poupança e Crédito

Abstract

This paper aims to carry out a study about the tools and techniques used by the Savings and Credit Bank in the analysis and evaluation of investment projects of its borrowers. In order to achieve this objective, a comparison between its decision-making processes and the ones presented in the scientific literature was carried out, to be able to understand the problem of credit risk and bad credit standing of the bank. The investigation concludes that because it is a public bank, it is forced to support projects that would otherwise not be accepted. It has also been found that a portion of the credit in default of the bank originates in clients liable for services rendered to the State, lacking the bank to demand the proper guarantees or the application of credit insurance. It is concluded that the bank problem relates to those arising from asymmetric information, namely adverse selection and moral risk.