Multi-criteria analysis of decision-making by international commercial banks for providing shipping loans

Abstract

This research investigates the underwriting attitude of international commercial banks in lending shipping loans. By adopting the analytic hierarchical process methodology, the underwriting attitude is captured to understand how bankers would deal with shipping loans in response to the current lengthy recession. We find that bankers focus on the criteria of corporate recourse (CR) in their decision-makings. Of the CR factors, the financial strength of shipowner is the most important factor, followed by the shipowner's business history and the bank-firm relationship. With the current underwriting attitude, the shipping sector may have limited access to shipping loans of international commercial banks due to low corporate ratings caused by the long recession and the nature of industry itself: volatility, fragmentation, capital intensity, high leverage, etc.