Leveraging financial personality for inclusive credit scoring amidst global uncertainty
Abstract
The Ukraine war, high inflation and rising interest rates are jeopardising people's ability to afford essential items such as food and energy, causing a widespread sense of vulnerability worldwide. Consequently, access to finance has become increasingly challenging for vulnerable consumer groups, including young adults without established credit histories, senior citizens with fixed incomes, start-up entrepreneurs, sole traders, single parents, immigrants in Western markets. To address this issue, this study explores the potential use of individuals' financial personality for inclusive credit scoring in these uncertain environments. Examining a sample of low-income individuals in the USA and the Netherlands, our psychometric scoring models (PSMs) demonstrate that late payments can be attributed to factors such as financial capability, materialistic tendencies, impulsive buying behaviour, social desirability and attitudes towards debt. These findings provide evidence that PSMs offer a viable solution to advance financial inclusion for vulnerable customer segments amidst global uncertainty.
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Author's Biography
Diederick Van Thiel is a researcher at the Tilburg School of Social and Behavioral Sciences, specialising in human-centred artificial intelligence (AI) in finance. Additionally, he holds the position of Founder/CEO at AdviceRobo, a prominent European FinTech 50 company specialising in AI and dynamic personality-based risk and marketing management. With a wealth of experience spanning over 30 years, Diederick has held key management roles at banks and mobile operators, including previous board positions at ING and KPN Mobile. Currently, he also serves as a non-executive director on the boards of Ikano Bank (IKEA) and Channel Capital Advisors.
John Goedee is Professor by special appointment at the Department of Organization Studies, Tilburg School of Social and Behavioral Sciences. He holds a chair in complex collaborative processes. John has a MSc degree in change management from Erasmus University, Rotterdam and a PhD in strategic change management from Tilburg University.
Roger Leenders is Professor of Intra-Organizational Networks at the Tilburg School of Social and Behavioral Sciences. His research focuses on the antecedents and consequences of networks in and of teams. Roger received a PhD in sociology and an MSc degree in econometrics from the University of Groningen.
Citation
Van Thiel, Diederick, Goedee, John and Leenders, Roger (2023, December 1). Leveraging financial personality for inclusive credit scoring amidst global uncertainty. In the Journal of Risk Management in Financial Institutions, Volume 17, Issue 1. https://doi.org/10.69554/MGYU1477.
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