University of Twente Student Theses


Improving the effectiveness of the high-touch credit approval process

Bramer, B. (2023) Improving the effectiveness of the high-touch credit approval process.

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Abstract:Qredits is a non-profit microfinance institution that evaluates credit applicants not only on hard financial data but also on soft objective information. Unlike hard information, soft information is not transferred in the credit approval process. Hence risks that become clear from this information to loan officers are not fully conveyed to decisionmakers. No validated treatment can be found in the literature to convey this information in a high-touch credit approval process. This research aims to increase the effectiveness of this high-touch credit approval process. Through a design study, a treatment is designed that codifies soft information based on different aspects and transfers this to the second decision-maker, reducing the asymmetric information gap between the loan officer and the decision-maker. The decision-maker can form a clearer picture of the risks, contributing to more efficient decision-making. The research has several phases. Firstly, through nine interviews and two observation studies with loan officers, important soft information in the credit process becomes apparent. Secondly, a design is made where this soft information is combined into 19 aspects which can then be assessed. The loan officer must assess these after an interview with the borrower. From this assessment, a soft score is calculated. This score should summarise the assessment. Thirdly, a case study (190 assessments) is carried out to determine if the design can be used. In the fourth and final step, the assessments from the case study were analysed, four risk managers filled out 26 surveys, 12 surveys from loan officers, and an expert interview was conducted to validate that the design contributes to a more effective high-touch credit approval process. Through this research and mainly the case studies, the conclusion is drawn that the use of the treatment contributes to a more effective approval process
Item Type:Essay (Master)
Faculty:EEMCS: Electrical Engineering, Mathematics and Computer Science
Programme:Business Information Technology MSc (60025)
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