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A credit score system for socially responsible lending

Author

Listed:
  • 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.

Suggested Citation

  • Begoña Gutiérrez-Nieto & Carlos Serrano-Cinca & Juan Camón-Cala, 2011. "A credit score system for socially responsible lending," Working Papers CEB 11-028, ULB -- Universite Libre de Bruxelles.
    • Handle: RePEc:sol:wpaper:2013/92109
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    Cited by:

    1. Simon Cornée & Ariane Szafarz, 2014. "Vive la Différence: Social Banks and Reciprocity in the Credit Market," Post-Print CEB, ULB -- Universite Libre de Bruxelles, vol. 125(3), pages 361-380.
    2. Fengsheng Chien & Chia-Nan Wang & Ka Yin Chau & Van Thanh Nguyen & Viet Tinh Nguyen, 2021. "Sustainability in the Business Sector: A Fuzzy Multicriteria Decision-Making Model for Financial Leasing Company Selection of the Vietnamese SMEs," SAGE Open, , vol. 11(3), pages 21582440211, July.
    3. Beisland, Leif Atle & Djan, Kwame Ohene & Mersland, Roy & Randøy, Trond, 2021. "Measuring Social Performance in Social Enterprises: A Global Study of Microfinance Institutions," EconStor Open Access Articles and Book Chapters, ZBW - Leibniz Information Centre for Economics, vol. 171(1), pages 51-71.
    4. Imma Lory Aprea & Gianni Bosi & Gabriele Sbaiz & Salvatore Scognamiglio, 2025. "Bi-Objective Portfolio Optimization Under ESG Volatility via a MOPSO-Deep Learning Algorithm," Mathematics, MDPI, vol. 13(20), pages 1-31, October.
    5. Patricia Durango-Gutiérrez & Juan Lara-Rubio & Andrés Navarro-Galera & Dionisio Buendía-Carrillo, 2024. "Microcredit Pricing Model for Microfinance Institutions under Basel III Banking Regulations," IJFS, MDPI, vol. 12(3), pages 1-21, September.
    6. Xuelian Li & Tinghui Lu & Jyh-Horng Lin, 2022. "Bank Interest Margin and Green Lending Policy under Sunflower Management," Sustainability, MDPI, vol. 14(14), pages 1-15, July.
    7. Carlos Serrano-Cinca & Yolanda Fuertes-Callén & Beatriz Cuellar-Fernández, 2021. "Managing for Stakeholders Using Multiple-Criteria Decision-Making Techniques," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 157(2), pages 581-601, September.
    8. Zedda, Stefano & Modina, Michele & Gallucci, Carmen, 2024. "Cooperative credit banks and sustainability: Towards a social credit scoring," Research in International Business and Finance, Elsevier, vol. 68(C).
    9. Christelle Simo & Hubert Tchakoute Tchuigoua & Christophe Faugere, 2022. "The Determinants of Micro Finance Institutions’ Decision to Receive a Social Rating: An Institutional and Resource-Dependence Perspective," Sustainability, MDPI, vol. 14(19), pages 1-18, September.
    10. Juan Lara-Rubio & Francisco J. Galvez-Sánchez & Valentín Molina-Moreno & Andrés Navarro-Galera, 2025. "Analysing credit risk in persons with disabilities as an instrument of financial inclusion," Journal of Social and Economic Development, Springer;Institute for Social and Economic Change, vol. 27(2), pages 581-603, August.
    11. Gaganis, Chrysovalantis & Pasiouras, Fotios & Tasiou, Menelaos & Zopounidis, Constantin, 2021. "CISEF: A composite index of social, environmental and financial performance," European Journal of Operational Research, Elsevier, vol. 291(1), pages 394-409.
    12. Pranith Kumar Roy & Krishnendu Shaw, 2022. "Developing a multi-criteria sustainable credit score system using fuzzy BWM and fuzzy TOPSIS," Environment, Development and Sustainability: A Multidisciplinary Approach to the Theory and Practice of Sustainable Development, Springer, vol. 24(4), pages 5368-5399, April.
    13. Pranith Kumar Roy & Krishnendu Shaw, 2021. "A multicriteria credit scoring model for SMEs using hybrid BWM and TOPSIS," Financial Innovation, Springer;Southwestern University of Finance and Economics, vol. 7(1), pages 1-27, December.
    14. Arian, Adam G. & Sands, John, 2024. "Do corporate carbon emissions affect risk and capital costs?," International Review of Economics & Finance, Elsevier, vol. 93(PA), pages 1363-1377.
    15. Roger Chapman Burk & Richard M. Nehring, 2023. "An Empirical Comparison of Rank-Based Surrogate Weights in Additive Multiattribute Decision Analysis," Decision Analysis, INFORMS, vol. 20(1), pages 55-72, March.
    16. Begoña Gutiérrez-Nieto & Juan Camón-Cala & Beatriz Cuéllar-Fernández & Yolanda Fuertes-Callén, 2025. "A bibliometric analysis of the social return on investment," Humanities and Social Sciences Communications, Palgrave Macmillan, vol. 12(1), pages 1-14, December.
    17. Marek Hudon & Marc Labie & Patrick Reichert, 2020. "What is a Fair Level of Profit for Social Enterprise? Insights from Microfinance," Journal of Business Ethics, Springer, vol. 162(3), pages 627-644, March.
    18. Juhyun Jung & Kathleen Herbohn & Peter Clarkson, 2018. "Carbon Risk, Carbon Risk Awareness and the Cost of Debt Financing," Journal of Business Ethics, Springer, vol. 150(4), pages 1151-1171, July.
    19. Anastasia Cozarenco & Ariane Szafarz, 2018. "Gender Biases in Bank Lending: Lessons from Microcredit in France," Journal of Business Ethics, Springer, vol. 147(3), pages 631-650, February.
    20. Fan, Di & Lo, Chris K.Y. & Zhou, Yi, 2021. "Sustainability risk in supply bases: The role of complexity and coupling," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 145(C).

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