Building relationship with new borrowers or developing transaction-based lending techniques such as credit scoring or leasing requires a build-up of expertise and technical capacity.
In addition, markets may be characterized by deficient information (limiting the effectiveness of financial statement-based lending and credit scoring).
Protecting consumers by strengthening the prohibition on the use of credit scoring, delays and other questionable screening techniques when providing quotes.
The high levels of arrears from low doc loans originated prior to 2008 have caused lenders to use restrictive credit scoring for new low doc loan applications.
For retail and unlisted company exposures, default probabilities are estimated using credit scoring or logistic regression, both of which are closely linked to the reduced form approach.
There are a number of credit scoring techniques such as: hazard rate modeling, reduced form credit models, weight of evidence models, linear or logistic regression.