Data Quality Assessment in Credit Risk Management in Banks

As the size and complexity of banks grow, the amount of data that their information systems need to handle also increases. This leads to the emergence of a variety of data quality (DQ) problems. Due to the possible economic losses due to such DQ issues, banks need to assure quality of their data via data quality assessment (DQA) techniques. This study presents a distinctive approach for data quality assessment in credit risk management. This approach grounds the selection of DQ dimensions on identification of data taxonomies for credit risk. Identification of data taxonomies with determination of data entities and attributes, followed by the development of DQ metrics based on the DQ dimension. DQ metrics are transformed into quality performance indicators in order to assess quality of credit risk data by means of DQA methods. Analysis of the results of DQA reveals the underlying causes of poor DQ performance. Identification of DQ problems and their major causes is followed by suggestion of appropriate improvement techniques based on the size, complexity and criticality of the problems in the context of credit risk management.