Evaluating Intellectual Capital for supporting Credit Risk Assessment: an Empirical Study

The aim of this work is to propose a new methodology for credit risk assessment, by considering not only financialindicators, but also variables concerning the intellectual capital (IC) of the firm. Two credit scoring models based onMulti Discriminant Analysis (MDA) have been developed: (1) a model which takes into account only financial dataand (2) a model which takes into account also intellectual capital variables, divided in the three traditional dimensions,human, structural and relational capital. The two models have been applied on a sample of large firms and the obtainedresults have been compared. The study highlights that the model which integrates IC and financial variables is moreaccurate than the model developed using only financial data. Intellectual capital reduces, and in some cases eliminates,both type I and type II errors. The result shows the importance of taking into account some aspects of intangible assetsinto the credit risk evaluation. Intellectual capital variables can help provide a better understanding of the firm’s value(financial and intangible).