Methods used by banks when taking medium term and long term financing decisions

Banks contribute through their work to financial developments as they ensure at least the necessary structure for the market economy. The lending activity of banks takes place in accordance with the national regulations specific to each country individually and it supports the facilitation of the business conduct as well as of the one belonging to non-financial clients. The lending methodology varies from one bank to another depending on the national policy of each one and also on the policies specific to the Central Bank existent in each country. The loan lending process requires a detailed analysis on the behalf of the bank so as to cover the default risk. The purpose of this paper is to examine the possible methods used by banks with the purpose of estimating the cash flows and the related growth rates for those medium-term and long-term loans granted to legal entities.