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Beyond the Numbers: Social Factors in Credit Risk

Author

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  • Asuamah Yeboah, Samuel
  • Mogre, Diana
  • Nartey Menzo, Benjamin Prince

Abstract

This review explores the critical impact of social and cultural factors on credit risk assessment and lending practices, especially in developing countries. By examining existing research, we delve into how cultural norms, social relationships, and community dynamics shape the evaluation of creditworthiness for small and medium-scale enterprises (SMEs). Our findings offer valuable insights for policymakers, financial institutions, and researchers aiming to enhance the accuracy and cultural sensitivity of credit risk management strategies for SMEs in these contexts.

Suggested Citation

  • Asuamah Yeboah, Samuel & Mogre, Diana & Nartey Menzo, Benjamin Prince, 2024. "Beyond the Numbers: Social Factors in Credit Risk," MPRA Paper 122363, University Library of Munich, Germany, revised 20 Aug 2024.
    • Handle: RePEc:pra:mprapa:122363
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    More about this item

    Keywords

    Credit risk assessment; lending decisions; social factors; cultural dynamics; small and medium-scale enterprises (SMEs); developing countries; community relationships; cultural norms; creditworthiness evaluation; financial inclusion.;
    All these keywords.

    JEL classification:

    • D14 - Microeconomics - - Household Behavior - - - Household Saving; Personal Finance
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • O16 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance
    • Z13 - Other Special Topics - - Cultural Economics - - - Economic Sociology; Economic Anthropology; Language; Social and Economic Stratification

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