A credit score system for socially responsible lending
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.
|Date of creation:||Jul 2011|
|Date of revision:|
|Publication status:||Published by:|
|Contact details of provider:|| Postal: CP114/03, 42 avenue F.D. Roosevelt, 1050 Bruxelles|
Phone: +32 (0)2 650.48.64
Fax: +32 (0)2 650.41.88
Web page: http://difusion.ulb.ac.be
More information through EDIRC
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- James S. Dyer, 1990. "A Clarification of "Remarks on the Analytic Hierarchy Process"," Management Science, INFORMS, vol. 36(3), pages 274-275, March.
- Fock, Henry & Chan, Allan K.K. & Yan, Dengfeng, 2011. "Member-organization connection impacts in affinity marketing," Journal of Business Research, Elsevier, vol. 64(7), pages 672-679, July.
- Jonathan Morduch, 1999. "The Microfinance Promise," Journal of Economic Literature, American Economic Association, vol. 37(4), pages 1569-1614, December.
- Yurdakul, Mustafa & Ic, Yusuf Tansel, 2004. "AHP approach in the credit evaluation of the manufacturing firms in Turkey," International Journal of Production Economics, Elsevier, vol. 88(3), pages 269-289, April.
- Johnson, Shane A. & Sarkar, Salil K., 1996. "The valuation effects of the 1977 Community Reinvestment Act and its enforcement," Journal of Banking & Finance, Elsevier, vol. 20(5), pages 783-803, June.
- Harris, Jared D. & Sapienza, Harry J. & Bowie, Norman E., 2009. "Ethics and entrepreneurship," Journal of Business Venturing, Elsevier, vol. 24(5), pages 407-418, September.
- James S. Dyer, 1990. "Remarks on the Analytic Hierarchy Process," Management Science, INFORMS, vol. 36(3), pages 249-258, March.
- Steuer, Ralph E. & Na, Paul, 2003. "Multiple criteria decision making combined with finance: A categorized bibliographic study," European Journal of Operational Research, Elsevier, vol. 150(3), pages 496-515, November.
- Yoram Wind & Thomas L. Saaty, 1980. "Marketing Applications of the Analytic Hierarchy Process," Management Science, INFORMS, vol. 26(7), pages 641-658, July.
- Ambec, Stefan & Treich, Nicolas, 2007. "Roscas as financial agreements to cope with self-control problems," Journal of Development Economics, Elsevier, vol. 82(1), pages 120-137, January.
- James E. Smith & Detlof von Winterfeldt, 2004. "Anniversary Article: Decision Analysis in Management Science," Management Science, INFORMS, vol. 50(5), pages 561-574, May.
- Lewellen, Wilbur G, 1977. "Some Observations on Risk-Adjusted Discount Rates," Journal of Finance, American Finance Association, vol. 32(4), pages 1331-37, September.
- Eric Stein & Norita Ahmad, 2009. "Using the Analytical Hierarchy Process (AHP) to Construct a Measure of the Magnitude of Consequences Component of Moral Intensity," Journal of Business Ethics, Springer, vol. 89(3), pages 391-407, October.
- John Graham & Campbell Harvey, 2002. "HOW DO CFOs MAKE CAPITAL BUDGETING AND CAPITAL STRUCTURE DECISIONS?," Journal of Applied Corporate Finance, Morgan Stanley, vol. 15(1), pages 8-23.
- Cory Searcy, 2012. "Corporate Sustainability Performance Measurement Systems: A Review and Research Agenda," Journal of Business Ethics, Springer, vol. 107(3), pages 239-253, May.
- Goddard, John A. & McKillop, Donal G. & Wilson, John O. S., 2002. "The growth of US credit unions," Journal of Banking & Finance, Elsevier, vol. 26(12), pages 2327-2356.
- Zahra, Shaker A. & Gedajlovic, Eric & Neubaum, Donald O. & Shulman, Joel M., 2009. "A typology of social entrepreneurs: Motives, search processes and ethical challenges," Journal of Business Venturing, Elsevier, vol. 24(5), pages 519-532, September.
- Becker, Henk A., 2001. "Social impact assessment," European Journal of Operational Research, Elsevier, vol. 128(2), pages 311-321, January.
When requesting a correction, please mention this item's handle: RePEc:sol:wpaper:2013/92109. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Benoit Pauwels)
If references are entirely missing, you can add them using this form.