Consumer finance: challenges for operational research

Thomas, Lyn C. (2010) Consumer finance: challenges for operational research. Journal of the Operational Research Society, 61, (1), 41-52. (doi:10.1057/jors.2009.104).


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Consumer finance has become one of the most important areas of banking, both because of the amount of money being lent and the impact of such credit on global economy and the realisation that the credit crunch of 2008 was partly due to incorrect modelling of the risks in such lending. This paper reviews the development of credit scoring—the way of assessing risk in consumer finance—and what is meant by a credit score. It then outlines 10 challenges for Operational Research to support modelling in consumer finance. Some of these involve developing more robust risk assessment systems, whereas others are to expand the use of such modelling to deal with the current objectives of lenders and the new decisions they have to make in consumer finance.

Item Type: Article
Digital Object Identifier (DOI): doi:10.1057/jors.2009.104
ISSNs: 0160-5682 (print)
1476-9360 (electronic)
Keywords: consumer finance, credit scoring, risk-based pricing, classification techniques, customer lifetime value
Divisions : University Structure - Pre August 2011 > School of Management
ePrint ID: 155051
Accepted Date and Publication Date:
January 2010Published
Date Deposited: 01 Jun 2010 09:24
Last Modified: 31 Mar 2016 13:25

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