Credit Evolution In Romania During 2008-2013

In Romania the main bank’s activity is lending operation. Indeed, between banks' placements in first place stand the credits. The way in which banks allot the funds they manage can influence a decisive economic development locally or nationwide. On the other hand, any bank will assume, to some extent, risks when granting credits and, certainly, all banks currently register losses in the credit portfolio, when some borrowers does not honour their obligations. But whatever the risks, the credit portfolio losses can be minimized if credit operations are organized and managed professionally. From this point of view, the most important feature of the bank's management is to control the quality of the credit portfolio. This is because the poor quality of loans is the main cause of the banking failure. As you look into a report of a central bank report, the main causes of banks’ bankruptcies are: negligence in the lending rules’ elaboration; presence of too generous lending conditions, coupled with the absence of some clear normative; non-compliance with the internal rules of lending by the bank's staff; concentration of risky loans on certain market segments; weak control over the staff (credit officers); excessive growth of credit portfolio value, over reasonable possibilities to cover bank’s risks; faulty or non-existent systems for detecting problem loans; ignoration of the customers’ cash flow; preferential crediting (under market conditions).