The power to borrow and lend: investigating the cultural context as part of the lending decision

Abstract

This article addresses social contextual aspects of the lending decision not as irrational dimensions to be improved upon, but as important information that adds value to the rational decision-making process. It advocates a broader conceptualization of behavioural finance and the adoption of behavioural science theory and methods into credit scoring research. The article illustrates the use of behavioural sciences by presenting the results of an experimental study on the role of financial and social-cultural information on the lending decision process of experienced lenders in the United States. The study found that social-cultural information influenced the decision process in patterned and predictable ways. A future research agenda is outlined, and implications for credit scoring research and practice are discussed.

Keywords:

• culture
• credit-scoring
• small business