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A good sketch is better than a long speech: evaluate delinquency risk through real-time video analysis

Author

Listed:
  • Xiangyu Chang
  • Lili Dai
  • Lingbing Feng
  • Jianlei Han
  • Jing Shi
  • Bohui Zhang

Abstract

This article proposes an innovative method to assess borrowers’ creditworthiness in consumer credit markets by conducting machine-learning-based analyses on real-time video information that records borrowers’ behavior during the loan application process. We find that the extent of borrowers’ micro-facial expressions of happiness is negatively associated with loan delinquency likelihood, while the degree of fear expressions is positively associated with delinquency risk. These results are consistent with two economic channels relating to the adequacy and uncertainty of borrowers’ future income, drawn from the extant psychology and economics literature. Our study provides important practical implications for fintech lenders and policymakers.

Suggested Citation

  • Xiangyu Chang & Lili Dai & Lingbing Feng & Jianlei Han & Jing Shi & Bohui Zhang, 2025. "A good sketch is better than a long speech: evaluate delinquency risk through real-time video analysis," Review of Finance, European Finance Association, vol. 29(2), pages 467-500.
    • Handle: RePEc:oup:revfin:v:29:y:2025:i:2:p:467-500.
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    File URL: http://hdl.handle.net/10.1093/rof/rfae044
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    More about this item

    Keywords

    loan delinquency risk; real-time data; video analysis; machine learning; fintech;
    All these keywords.

    JEL classification:

    • D14 - Microeconomics - - Household Behavior - - - Household Saving; Personal Finance
    • G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies; Insider Trading
    • G23 - Financial Economics - - Financial Institutions and Services - - - Non-bank Financial Institutions; Financial Instruments; Institutional Investors
    • G51 - Financial Economics - - Household Finance - - - Household Savings, Borrowing, Debt, and Wealth

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