Abstract:
The study aimed to investigate the existence of the potential link between credit scoring and financial decision making by investigating the influence of credit scoring updates on customer affordability, explore the relationship between credit risk and credit scoring, and determine the effect of applying a credit scoring system on decreasing the probability of default through the accuracy of creditworthiness assessment progress in Sudanese commercial banks. Following an investigative phase to identify relevant variables in the sector, the research proceeds to an evaluative phase, in which an analysis is undertaken of financial and demographic data sets for Islamic finance applicants during 2010-2014. The study problem stemmed from the commercial banks adoption of personal judgment approach, which leads to grant credits to inappropriate borrowers while Statistical scoring techniques are shown to provide more efficient classification results than the currently used judgmental techniques. The study depended on several research methods; hence, the study adopted the descriptive methodology to determine the magnitude and the causes of the problem, the Discriminant analysis in the applied aspect, and the inductive method in drawing conclusions. The study indicated the existence of a statistical significant adverse relationship between high credit score and the probability of default; also, the existence of a statistically significant positive relationship between adopting credit scoring model and creditworthiness estimation process. The study most important recommendations call for commercial banks in Sudan to adopt the proposed model which may have positive influence in decreasing the non-performing loans.
