Credit Scoring, Risk, and Consumer Lendingscapes in Emerging Markets

Abstract

Statistical modelling has superseded traditional methods of assessing character and trustworthiness through personal knowledge and face-to-face interaction. Advances in credit scoring allow lenders to extend loans to a wider proportion of the population in spatially disparate locations and simultaneously reduce losses associated with nonperforming loans. Contrary to scientific approaches to credit and risk assessment, cultural theorists maintain that risk should be understood through a richer reading of social and cultural analysis and interpretation. I focus on consumer lendingscapes in emerging markets as an example of understanding the social and cultural constructed nature of risk and credit scoring by assessing technological expertise, legal systems, culture, norms, beliefs, and social relations of financial institutions in specific places. There are significant problems with extending methods of credit scoring and networks of credit bureaus developed in advanced societies to emerging markets.