It is also called
Expert-rule based model which is actually in practice for commercial analysis
under various aspects. This model does not have any fixed formula for rating MSMEs
but it adheres to some sound principles. The main objective of this model is to
analyse the financial data which is mainly guided by mainly credit experts,
product offered by the company and the type of industry it is operating in.

Evidently there is no clear
stance on which of the analysing models is superior, feasible, faster and
consistent but it depends on the various factors of the organisation being
assessed. There are inherent flaws in this expert judgemental model which are
stemming from financial behaviour of analysing visually;

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·     
people tend
to overestimate the precision of their knowledge

·     
Libby
(1975) shows that while experts were correct in prediction of default 74% of
the time, a simple ratio of liability/assets outperformed analysts

 

Concluding
that even
though human mind is capable of handling the interactions between a couple of
differentiated variables but there always exists a percentage of biasness,
over/underestimation. Hence, for this model it is suggested to carry out full
empirical, statistical analysis and carry out correlation test to put forward a
reliable expert rating to any organisation. Just looking at the financial books
or qualitative aspects of any SME won’t give them a fair rating to apply for
any kind of financial aid. The key is for the expertise of an analyst to
concentrate more on areas where it adds the most value, thus leaving the
ultimate competitive advantage with judgmental process.