A Scoring Model of
the Risk of Costly Arrears at a Microfinance Lender in Bolivia
Mark Schreiner
(2004) Journal of Microfinance,
Vol. 6, No. 2, pp. 65–88.
Can scoring models
help
microlenders in poor countries as much as they have helped credit-card
lenders
in rich countries? This paper presents a scorecard that predicts the
probability that loans from a microlender in Bolivia will have arrears of 15 days or more.
Although
arrears in microfinance depend on many factors difficult to include in
scorecards,
the paper shows that inexpensive, simple-to-collect data does have some
predictive power. In microfinance, scoring will not replace loan
officers, but
it can flag high-risk cases and act as a cross-check on loan officer’s
judgment.
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