Credit Risk Evaluation Of Small Enterprises Based On The AHP-FCE Model

The credit risk is the main risk of commercial banks, and the credit business of small enterprises catches the commercial banks’attention because of the rapid development of small enterprises and the influence of small enterprises on the whole society. Therefore, it’s important to evaluate the credit risk of small enterprises scientifically and reasonably, and it needs to establish an effective model. This paper analysis the relative theories and points out there advantages and disadvantages. Combining with the characteristics of small enterprises in China, this paper also points out the defects of the models which is proposed by some experts or is used now by commercial banks.As a result, this paper put forward a new small enterprises credit risk model based on AHP-FCE. This model combines factor analysis with AHP-FCE creatively, and it means the combination of mathematical statistics and subjective evaluation which is more scientific. Credit evaluation index system in this model include quantitative indicators and qualitative indicators, and pays more attentions on the future development of small enterprises and the behavior of small enterprises owners, leading a scientific and real reflect on credit risk of small enterprises. What’s more, the final evaluation result of this model is open, commercial banks can choose a principle to determine the final result according to their own risk appetite, it’s more flexible.At the end of this paper, there is a case to inspect the effectiveness of the AHP-FCE model and other two models--hierarchical classification and logit model. The result is that the AHP-FCE model is much more effective than the other two models.