Impact of anti-discrimination laws on credit scoring

Galina Andreeva*, Jake Ansell, Jonathan Crook

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review

Abstract

The political desire for further integration within the European Union will have an increasing effect on the financial services industry, including banking and credit lending. Harmonisation can potentially have great benefit for consumers as the European banks compete for their business across the Union. Harmonisation, however, brings with it a set of decisions for both credit grantors and regulators. There are issues associated with information that can be used in risk assessment to ensure fair decisions in granting credit. In the past the rules have been developed under national legislation. EU directives seek to harmonise the national rules and provide a new guidance on variables that may be held. The major concern relates to the issue of discrimination. The aim of the law is to promote the principle of equal treatment, which can be interpreted in a number of ways. The legal interpretation of discrimination does not necessarily coincide with the economic standpoint. Furthermore, previous empirical research suggests that prohibition of variables may not only affect the ability to distinguish between good and bad risk, but may also be disadvantageous to the groups the legislation is supposed to protect. This paper explores these issues from both theoretical and practical points of view.
Original languageEnglish
Pages (from-to)22-33
Number of pages12
JournalJournal of Financial Services Marketing
Volume9
DOIs
Publication statusPublished - 1 Sep 2004

Keywords

  • banking
  • customer relations
  • e-business
  • e-commerce
  • financial brokers
  • financial engineering
  • financial institutions
  • financial marketing
  • financial models
  • financial planning
  • financial training
  • insurance
  • intermediation
  • knowledge management
  • management
  • marketing
  • marketing strategy
  • pensions
  • services quality
  • virtual organisations
  • European Union harmonisation
  • credit scoring
  • anti-discrimination laws
  • regulation

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