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A credit score system for socially responsible lending

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Author Info

  • Begoña Gutiérrez-Nieto
  • Carlos Serrano-Cinca
  • Juan Camón-Cala

Abstract

Ethical banking, microfinance institutions or certain credit cooperatives, among others, grant socially responsible loans. This paper presents a credit score system for them. The model evaluates both social and financial aspects of the borrower. The financial aspects are evaluated under the conventional banking framework, by analysing accounting statements and financial projections. The social aspects try to quantify the loan impact on the achievement of Millennium Development Goals such as employment, education, environment, health or community impact. The social credit score model should incorporate the lender’s know-how and should also be coherent with its mission. This is done by using the Analytic Hierarchy Process (AHP) technique. The paper illustrates a real case: a loan application by a social enterprise presented to a socially responsible lender. The decision support system not only produces a score, but also reveals strengths and weaknesses of the application.

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File URL: https://dipot.ulb.ac.be/dspace/bitstream/2013/92109/1/wp11028.pdf
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Bibliographic Info

Paper provided by ULB -- Universite Libre de Bruxelles in its series Working Papers CEB with number 11-028.

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Length: 23 p.
Date of creation: Jul 2011
Date of revision:
Publication status: Published by:
Handle: RePEc:sol:wpaper:2013/92109

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Related research

Keywords: OR in banking; Credit scoring; AHP; social banking; social impact assessment; financial ratios;

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Cited by:
  1. Simon Cornée & Ariane Szafarz, 2012. "Vive la Différence: Social Banks and Reciprocity in the Credit Market," Working Papers CEB 12-029, ULB -- Universite Libre de Bruxelles.

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