A Learning and Control Perspective for Microfinance

no code implementations • 26 Jul 2022 • Christian Kurniawan, Xiyu Deng, Adhiraj Chakraborty, Assane Gueye, Niangjun Chen, Yorie Nakahira

Although many methods in regular finance can estimate credit scores and default probabilities, these methods are not directly applicable to microfinance due to the following unique characteristics: a) under-explored (developing) areas such as rural Africa do not have sufficient prior loan data for microfinance institutions (MFIs) to establish a credit scoring system; b) microfinance applicants may have difficulty providing sufficient information for MFIs to accurately predict default probabilities; and c) many MFIs use group liability (instead of collateral) to secure repayment.

Decision Making Fairness