A credit score system for socially responsible lending

Begoña Gutiérrez-Nieto, Carlos Serrano-Cinca and Juan Camón-Cala

No 11-028, Working Papers CEB from ULB -- Universite Libre de Bruxelles

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.

Keywords: OR in banking; Credit scoring; AHP; social banking; social impact assessment; financial ratios (search for similar items in EconPapers)
Pages: 23 p.
Date: 2011-07
New Economics Papers: this item is included in nep-ban, nep-mfd and nep-pke
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Citations: View citations in EconPapers (5)

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Journal Article: A Credit Score System for Socially Responsible Lending (2016)
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