The narrative and the algorithm: Genres of credit reporting from the nineteenth century to today
AbstractCredit reporting is a contested process whereby parties with distinct interests (borrowers, lenders, and intermediaries) jointly construct the form, method, and style of credit assessment. In contrast to theories that argue information should grow more secure and credit relationships more transparent over time, the conflicted struggle over representation produces different styles or “genres” of credit evaluation that are compromises between the interests of the different parties. Thus, in the United States, trade credit reporting in the nineteenth century evolved an enduring narrative reporting style, incorporating heterogeneous forms of information not easily reducible to a single quantitative score. Lack of institutions for sharing information between creditors, legal precedents, and strong resistance among borrowers to overly intrusive surveillance made the narrative report the best means to handle the diverse business credit market. By contrast, lenders in the consumer credit market established information sharing capabilities, which were enhanced after World War II when banks developed the credit card and card verification systems. Fair credit laws in the 1960s and 70s actually reinforced the move to quantitative scoring based on information shared among creditors, eventually institutionalizing the FICO score as the prime method of consumer credit evaluation.
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Bibliographic InfoPaper provided by University Library of Munich, Germany in its series MPRA Paper with number 28142.
Date of creation: 06 Jan 2011
Date of revision:
credit score; credit reporting; credit; information economy; surveillance; FICO;
Find related papers by JEL classification:
- Z1 - Other Special Topics - - Cultural Economics
- N82 - Economic History - - Micro-Business History - - - U.S.; Canada: 1913-
- N22 - Economic History - - Financial Markets and Institutions - - - U.S.; Canada: 1913-
This paper has been announced in the following NEP Reports:
- NEP-ALL-2011-01-30 (All new papers)
- NEP-BAN-2011-01-30 (Banking)
- NEP-HIS-2011-01-30 (Business, Economic & Financial History)
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