Management of the Cutoff for Granting Consumer Credit
Main Article Content
Abstract
Credit issued directly to consumers is processed in volume through credit-scoring computer models that analyze a large number of potential clients in order to eliminate those that have poor payment histories. This avoids financial losses that arise from payment default. However, by refusing consumers who might default based on purely financial criteria, these models also refuse a large number of consumers with potentially good payment behavior, which can also reduce retailers' potential gains. The main objective of this paper is to verify whether corporate earnings can improve by considering the operating margin when defining the cutoff for direct lending to consumers. We used a statistical measure known as the Receiver Operating Characteristic (ROC) curve and the approach offered by Stein (2005) to build simulations around real market values, which allowed us to confirm that by being flexible and taking into account the operating margin, companies may improve net earnings.
Downloads
Download data is not yet available.
Download data is not yet available.
Article Details
How to Cite
Crespi Júnior, H., Perera, L. C. J., & Kerr, R. B. (1). Management of the Cutoff for Granting Consumer Credit. Journal of Contemporary Administration, 21(2), 269-285. https://doi.org/10.1590/1982-7849rac2017170025
Section
Technological Articles
Since mid-February of 2023, the authors retain the copyright relating to their article and grant the journal RAC, from ANPAD, the right of first publication, with the work simultaneously licensed under the Creative Commons Attribution 4.0 International license (CC BY 4.0), as stated in the article’s PDF document. This license provides that the article published can be shared (allows you to copy and redistribute the material in any medium or format) and adapted (allows you to remix, transform, and create from the material for any purpose, even commercial) by anyone.
After article acceptance, the authors must sign a Term of Authorization for Publication, which is sent to the authors by e-mail for electronic signature before publication.