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A Social Approach to Microfinance Credit Scoring

Carlos Serrano-Cinca (), Begoña Gutiérrez-Nieto and Nydia M. Reyes

No 13-013, Working Papers CEB from ULB -- Universite Libre de Bruxelles

Abstract: Microfinance Institutions (MFIs) provide loans to low income individuals. The credit scoring systems of MFIs, if they exist, are strictly financial. Although many MFIs consider the social impact of their loans, they do not incorporate formal systems to estimate this social impact. This paper proposes that their creditworthiness evaluations should be coherent with their social mission and should, accordingly, estimate the social impact of microcredit. Thus, a decision support system to facilitate microcredit granting is proposed, and multicriteria evaluation is used to translate MFI’s social mission into numbers. The assessment of social impact is performed by calculating the Social Net Present Value (SNPV). The system captures credit officers’ experience and addresses incomplete and intangible information. The model has been tested in a microfinance institution. The paper illustrates an example of its use in practice.

Keywords: microfinance; credit scoring; decision support system; social impact; multicriteria; social finance (search for similar items in EconPapers)
Pages: 23 p.
Date: 2013-02-18
New Economics Papers: this item is included in nep-mfd
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Citations: View citations in EconPapers (2)

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