Item Type |
Monograph
(Working Paper)
|
Abstract |
Developing financial markets experience a swift increase in the availability of borrower-information from credit information sharing systems. I study whether banks can use this information to automate credit decisions. In the wake of a randomized controlled trial, a bank in Africa introduced an automated credit decision-process based on a credit scoring technology at half of its branches, while the other half kept applying an extensive screening procedure as a base for a loan officer's expert judgment. Results show that the quality of the loan Portfolio in the treatment branches did not decrease significantly, at the cost of rejecting only a 6 percentage points higher share of applications, using a much simpler procedure. An analysis of the costs and benefits of the credit scoring system strongly suggests that the bank's cost of lending decreased substantially. |
Authors |
Gietzen, Thomas |
Language |
English |
Subjects |
finance |
HSG Classification |
contribution to scientific community |
HSG Profile Area |
None |
Date |
June 2017 |
Publisher |
SoF - HSG |
Place of Publication |
St. Gallen |
Series Name |
School of Finance Working Paper Series |
Volume |
2017/09 |
Number |
09 |
Number of Pages |
37 |
Depositing User |
Geraldine Frei-Böbel
|
Date Deposited |
08 Jun 2017 12:12 |
Last Modified |
17 Jan 2018 15:27 |
URI: |
https://www.alexandria.unisg.ch/publications/250987 |