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A Judgment-Based Risk Assessment Framework for Consumer Loans

Fernando A. F. Ferreira, Ieva Meidutė-Kavaliauskienė, Edmundas K. Zavadskas (), Marjan S. Jalali () and Sandra M. J. Catarino ()
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Fernando A. F. Ferreira: ISCTE Business School, BRU-IUL, University Institute of Lisbon, Avenida das Forças Armadas, 1649-026 Lisbon, Portugal2Fogelman College of Business and Economics, University of Memphis, Memphis, TN 38152-3120, USA
Ieva Meidutė-Kavaliauskienė: Faculty of Business Management, Vilnius Gediminas Technical University, Saulėtekio al. 11, LT-10223 Vilnius, Lithuania4BRU-IUL, University Institute of Lisbon, Avenida das Forças Armadas, 1649-026 Lisbon, Portugal
Edmundas K. Zavadskas: Faculty of Civil Engineering, Vilnius Gediminas Technical University, Saulėtekio al. 11, LT-10223 Vilnius, Lithuania
Marjan S. Jalali: ISCTE Business School, BRU-IUL, University Institute of Lisbon, Avenida das Forças Armadas, 1649-026 Lisbon, Portugal
Sandra M. J. Catarino: School of Management and Technology, Polytechnic Institute of Santarém, Complexo Andaluz, Apartado 295, 2001-904 Santarém, Portugal

International Journal of Information Technology & Decision Making (IJITDM), 2019, vol. 18, issue 01, 7-33

Abstract: Credit to personal consumption is an important activity of the financial system and crucial to the socioeconomic development of a country. It is important, therefore, that the methods and techniques used to evaluate consumer credit risk be as efficient and informative as possible, in order to strengthen decisions to approve or reject credit and promote sustainable economic growth. This study aims to create a multiple criteria expert system which integrates cognitive maps and the measuring attractiveness by a categorical-based evaluation technique (MACBETH) to create a complementary framework for consumer credit risk assessment. The results show that this integrated approach allows the evaluation process of consumer credit risk to be more informed and transparent, providing value for the evaluation processes of this type of credit application as a result of the privileged contact established with a panel of credit analysts. Advantages, limitations, and managerial implications are also discussed.

Keywords: Credit to consumption; judgment-based risk analysis; cognitive maps; MCDA; MACBETH (search for similar items in EconPapers)
Date: 2019
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DOI: 10.1142/S021962201850044X

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