Current Status of Allocating Loans to Individuals and Prospects for the Implementation of Behavioral Economics in the Lending Process

Abstract

This research defines the factors of loan repayment behavior based on psychological and behavioral economics theories. One of the main tasks of our country's banks is to further develop the banking system, which is the main link of the economy, and especially to increase the weight of credit operations. The efficient banking systems of countries operate by introducing innovations in banks, providing new types of services, and improving existing assets and passive operations. In our republic, commercial banks currently allocate loans to customers who consider their credit history and salary income. However, it is known from foreign experience that this method of lending has numerous disadvantages and requires attracting customers on a limited scale.

 In this article, the credit system, the concept of credit scoring, the rules of the lending procedures and problems of lending the banks and methods of determining the solvency are mentioned. Also, the foreign experience of lending practice based on the factors of the behavioral economy, views of scientific researchers and work are given. Based on these, the importance and prospects of introducing the factor of behavioral economy in the banks and credit organizations of our republic are highlighted.