A Unified Framework for Credit Evaluation for Internet Finance Companies: Multi-Criteria Analysis Through AHP and DEA

Wei Gu (), Meheli Basu (), Zhang Chao () and Lirong Wei ()
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Wei Gu: Donlinks School of Economics and Management, University of Science and Technology Beijing, Beijing 100083, P. R. China
Meheli Basu: Joseph M. Katz Graduate School of Business, University of Pittsburgh, Pittsburgh, PA-15232, USA
Zhang Chao: School of Finance, Zhejiang University of Finance and Economics, Hangzhou 310018, P. R. China
Lirong Wei: Donlinks School of Economics and Management, University of Science and Technology Beijing, Beijing 100083, P. R. China

International Journal of Information Technology & Decision Making (IJITDM), 2017, vol. 16, issue 03, 597-624

Abstract: Internet finance is China’s newest hot topic in its booming economy. Success story of entrepreneurial ventures such as Alibaba have paved way for numerous entrepreneurs to establish innovative start-ups and enterprises. Presently, number of up and coming small and medium enterprises (SMEs) is above 80% of all new enterprises in China, involving 39 major categories of industrial sectors. Such enterprises are hugely backed by Internet finance companies for funding and easy transactions. It is important to develop efficient methodology and improve existing ones for credit assessment so as to aid Internet finance companies in making effective and symmetric funding decisions. To evaluate the performance of SMEs effectively, we propose an Internet finance credit index system, which includes financial, credit, enterprise development and Internet financial status. We combine the Analytic Hierarchy Process (AHP) and data envelopment analysis (DEA) to form a unified evaluation framework, which has the ability to address the subjective (AHP) and the objective (DEA) concerns, respectively. The proposed framework can assist Internet finance organizations to develop a transparent, unbiased and integrated framework for evaluating credit index of SMEs and start-ups. The result of our framework identifies the most important characteristics of SMEs and start-ups which contribute to overall credit rating, provides valuable references for Internet financial organization to make better resource allocation (funding decisions). The framework for credit evaluation also provides start-ups and SMEs an insight into improving their credit rating.

Keywords: Credit index; Internet finance; small-medium enterprises; data envelopment analysis; analytic hierarchy process; multiple criteria analysis (search for similar items in EconPapers)
Date: 2017
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Citations: View citations in EconPapers (5)

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DOI: 10.1142/S0219622017500134

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