The use of conjoint analysis to review the attractiveness of credit conditions

Дарко Милуновић; Дарија Милуновић

Authors

Дарко Милуновић Економски факултет Универзитета у Бањој Луци
Дарија Милуновић НЛБ Развојна банка, А.Д. Бања Лука

Keywords:

Aggregate demands, loan oﬀer, conjoint analysis

Abstract

The increase in aggregate demand is one of the primary goals of every economy. By achieving this goal, many positive eﬀects in economy are also achieved which is manifested through increase in consumption, investment and creating a better social environment. The state has the key role in achieving this goal, with its instruments and policies it directs economy toward demand increase. Although all economies aspire to this goal, many are not in position to realize the goal they have set for themselves.

The alternative, in an eﬀort to increase aggregate demand, may be the banking sector. Increase in volume of loans directly inﬂuences the growth of demand. Commercial banks, like all companies, strive to continually increase their value on the market and to better position themselves. One way to succeed in doing so is to increase the income. Given the specificity of commercial banking, their goal is achieved, inter alia, by improving of lending. In order to increase income on this basis, a very important prerequisite is the formation of attractive credit oﬀers with the strong emphasis on respecting the views of clients on this issue. To respect and value clients` views means identifying key factors and adjusting the oﬀer to them.

The power of conjoint analysis is that it allows us to get the answer to this problem. The algorithm of this analysis is a multivariate procedure to measure the preferences of bank clients regarding the loan attributes. Conjoint analysis relies on a survey of bank clients with the representative set of attributes that are ranked according to clients` preferences. Obtained quantitative informations can be used to model the credit oﬀer. For example, one commercial bank is interested in forming a new attractive credit oﬀer and wants to study the inﬂuence of several factors (attributes) on client preferences in order to determine which factor is the most important one.

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