DEVELOPING AN EARLY WARNING SYSTEM FOR LOAN CLASSIFICATION AND CREDIT RISK MANAGEMENT

This thesis examines the development of an early warning system (EWS) for  improving loan classification and credit risk management in commercial banks and  other lending institutions. The proposed framework integrates borrower-level  financial indicators, repayment behaviour, account activity, collateral quality,  sectoral conditions, and macroeconomic signals into a unified risk-monitoring  process. The study emphasizes the transition from periodic, backward-looking loan  review to continuous and forward-looking risk detection.