Early warning mechanism to control delinquency levels
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Abstract
The growth of financial institutions depends to a great extent on the granting of loans to their customers. This contract establishes the values and terms in which the capital must be repaid together with interest and commissions. Delinquency related to loans originated when there was inadequate analysis and control of the policies established in each institution. Therefore, this document proposes an early warning mechanism to control delinquency levels. It also offers the measurement of the performance of these financial institutions through the CAMEL methodology. This will allow senior management to take prompt decisions and corrective actions to avoid decreased liquidity levels. A heat map is also defined to enable timely detection of risk and thus place greater emphasis on those that are necessary. Finally, the conclusions and recommendations are presented as a basis for future research, encouraging readers to deepen or replicate the work.
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