A Scoring Model of the Risk of Costly Arrears at a Microfinance Lender in Bolivia
AbstractCan scoring models help microfinance lenders in poor countries as much as they have helped credit-card lenders in rich countries? I model the probability that loans from a microlender in Bolivia had arrears of 15 days or more. Although arrears in microfinance depend on many factors difficult to include in statistical models, I find that inexpensive data does indeed have some predictive power. In microfinance, computer models will not replace loan officers, but they can flag the highest risks and act as a cross-check on human judgement.
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Date of creation: 05 Sep 2001
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Scoring; risk management; credit risk; Bolivia; microfinance;
Find related papers by JEL classification:
- O57 - Economic Development, Technological Change, and Growth - - Economywide Country Studies - - - Comparative Studies of Countries
- O54 - Economic Development, Technological Change, and Growth - - Economywide Country Studies - - - Latin America; Caribbean
This paper has been announced in the following NEP Reports:
- NEP-ALL-2001-09-10 (All new papers)
- NEP-LAM-2001-09-10 (Central & South America)
- NEP-MFD-2001-09-10 (Microfinance)
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