‘Financially Sorted Kiwis’: A critical enquiry into consumer credit scoring systems and subjectivities in New Zealand

<p>Credit scoring is an automated exercise in predictive analytics deployed by retail lenders and their agents to overcome the perennial problem of the ‘information asymmetries’ existing between debtors and creditors. Credit scoring systematically outperforms ‘subjective’ decision-making by lenders about loan applications, lowering costs and increasing profitability by boosting the speed and consistency of judgements able to be made about credit risk. This system of expert knowledge has emerged as a crucial part of the lending infrastructure and a new ‘core competency’ for lenders. The implications for social subjecthood, however, are underexplored: the extant literature on finance and society says little about credit scoring’s effects as a ‘disciplinary device’ on credit consumers, or how scoring systems might accustom would-be borrowers to conduct and conceive of their lives in particular ways. My thesis presents findings from an exploratory sociological study of consumer credit scoring systems in New Zealand. It analyses data gathered in 2013 from seventy women and men in focus groups and open-ended individual interviews about their subjective experiences of debt and credit scoring practices. The research fills a gap in critical social inquiry into consumer credit provision by using an interpretive qualitative approach to identify ways in which the commoditised information platforms administered by credit bureaus in New Zealand are involved in the self-understandings of individuals. The study draws on Marxist, Foucaultian and feminist understandings of finance and the consumer-subject to offer a critical reading of participants’ involvement in the workings of the credit economy. I suggest that the systematic surveillance of borrowers by lending institutions through credit bureaus not only implies new forms of economic control and population management, but extends the instrumental rationality of finance into the realm of society and the self. Credit scoring – a market device that operates as an “objective” site of reality construction and revalorisation of productive and exchange relations – hails us as dutiful consumers and citizens from the spaces and rhythms of financial activity. There is also evidence that it operates as a ‘technology of self’, permitting forms of self-administration whereby individuals constitute themselves as particular types of financially viable beings within the wider interpersonal and intersubjective complex of memories, measures, morals, corporeality, obligation, anxiety, and affect. In this ‘techno-social’ production of the subject, in which credit agencies exist as loci or conduits of governmental intent, individuals located within borrowing collectives can be interpreted variously as: (a) credit subjects, consumers subjectified in service to the debt economy; (b) credit-scoring subjects, hyper-rationalised subjectivating complements to calculative market devices; and (c) creditworthy subjects, cultural obligors forming part of an unruly social unity concerned intersubjectively with emotive and intimate relations with families, co-dependants, employers, colleagues, retailers, credit grantors and institutions. The complex, multifaceted and sometimes contradictory ways in which participants negotiate new knowledges of themselves as sources of profit and governable risks call into question the adequacy of orthodox microeconomic accounts of ‘self-interested’ financial behaviour as a model for economic and social behaviour. They also emphasise how an overly simplistic reliance on the notion of ‘responsibilisation’ in the financialisation of everyday life is evident within some conceptions and critiques of the neoliberal subject. Participants’ experiences and self-understandings, rather, illustrate how the contemporary credit consumer is not simply dominated from above by the structural disciplines of finance capital, but is constituted ascendantly by harnessing individuals’ own capabilities of self-direction and expressions of freedom and desire. What is at stake in the unspoken politics of consumer finance is the targeting of the willing self as the raw material of credit – of the deeper affinities of finance with the discerning and reflexive subject.</p>

‘Financially Sorted Kiwis’: A critical enquiry into consumer credit scoring systems and subjectivities in New Zealand

<p>Credit scoring is an automated exercise in predictive analytics deployed by retail lenders and their agents to overcome the perennial problem of the ‘information asymmetries’ existing between debtors and creditors. Credit scoring systematically outperforms ‘subjective’ decision-making by lenders about loan applications, lowering costs and increasing profitability by boosting the speed and consistency of judgements able to be made about credit risk. This system of expert knowledge has emerged as a crucial part of the lending infrastructure and a new ‘core competency’ for lenders. The implications for social subjecthood, however, are underexplored: the extant literature on finance and society says little about credit scoring’s effects as a ‘disciplinary device’ on credit consumers, or how scoring systems might accustom would-be borrowers to conduct and conceive of their lives in particular ways. My thesis presents findings from an exploratory sociological study of consumer credit scoring systems in New Zealand. It analyses data gathered in 2013 from seventy women and men in focus groups and open-ended individual interviews about their subjective experiences of debt and credit scoring practices. The research fills a gap in critical social inquiry into consumer credit provision by using an interpretive qualitative approach to identify ways in which the commoditised information platforms administered by credit bureaus in New Zealand are involved in the self-understandings of individuals. The study draws on Marxist, Foucaultian and feminist understandings of finance and the consumer-subject to offer a critical reading of participants’ involvement in the workings of the credit economy. I suggest that the systematic surveillance of borrowers by lending institutions through credit bureaus not only implies new forms of economic control and population management, but extends the instrumental rationality of finance into the realm of society and the self. Credit scoring – a market device that operates as an “objective” site of reality construction and revalorisation of productive and exchange relations – hails us as dutiful consumers and citizens from the spaces and rhythms of financial activity. There is also evidence that it operates as a ‘technology of self’, permitting forms of self-administration whereby individuals constitute themselves as particular types of financially viable beings within the wider interpersonal and intersubjective complex of memories, measures, morals, corporeality, obligation, anxiety, and affect. In this ‘techno-social’ production of the subject, in which credit agencies exist as loci or conduits of governmental intent, individuals located within borrowing collectives can be interpreted variously as: (a) credit subjects, consumers subjectified in service to the debt economy; (b) credit-scoring subjects, hyper-rationalised subjectivating complements to calculative market devices; and (c) creditworthy subjects, cultural obligors forming part of an unruly social unity concerned intersubjectively with emotive and intimate relations with families, co-dependants, employers, colleagues, retailers, credit grantors and institutions. The complex, multifaceted and sometimes contradictory ways in which participants negotiate new knowledges of themselves as sources of profit and governable risks call into question the adequacy of orthodox microeconomic accounts of ‘self-interested’ financial behaviour as a model for economic and social behaviour. They also emphasise how an overly simplistic reliance on the notion of ‘responsibilisation’ in the financialisation of everyday life is evident within some conceptions and critiques of the neoliberal subject. Participants’ experiences and self-understandings, rather, illustrate how the contemporary credit consumer is not simply dominated from above by the structural disciplines of finance capital, but is constituted ascendantly by harnessing individuals’ own capabilities of self-direction and expressions of freedom and desire. What is at stake in the unspoken politics of consumer finance is the targeting of the willing self as the raw material of credit – of the deeper affinities of finance with the discerning and reflexive subject.</p>

A New Legal Design for the Credit Reporting Industry

Under the traditional and well-established conception, credit bureaus are understood as being little more than vessels storing customer data that has been furnished by specific suppliers, such as banks, intermediaries and, more generally, lenders. Accordingly, credit bureaus are deemed to play a ‘neutral’ role in the credit market. Hence, in Europe and the US, they are generally not responsible for any inaccuracies in the information they put into circulation, despite data quality being crucial for the proper functioning of the market and for a fair allocation of resources. This circumstance engenders, however, a conflict between the market interest in accurate data and the ‘endogenous’ for-profit interest of credit bureaus. More specifically, despite their performing an important activity in an oligopolistic environment, credit bureaus are presently allowed to pursue their for-profit interest without any substantial accountability as regards their ‘exogenous’ function of transmitting accurate data. This disequilibrium oftentimes results in under-performance and a low level of data quality. The analysis points out, also through a comparative analysis with the rules governing the US credit report system, how these circumstances in the credit market sector can imperil some pivotal objectives of the EU legal policy, which aims at ensuring equal levels of protection among citizens of Member States within a unique environment dependent on the cross-border exchange of information.

Organization of credit work

The textbook presents theoretical and practical issues related to the organization of credit work of commercial banks with borrowers. The training material on the organization of lending to corporate and individual borrowers, interbank, international and state loans is presented in a short and accessible way, according to the modules. The risks inherent in various types of loans and credit bureaus are considered. In addition, to consolidate the knowledge of students, tasks, control and test questions are given. Meets the requirements of the federal state educational standards of secondary vocational education of the latest generation. For teachers and students studying in the general professional discipline "Organization of credit work" in the specialty 38.02.07 "Banking".

FORMATION AND DEVELOPMENT OF CREDIT BUREAUS IN RUSSIAN FEDERATION

In recent years, along with an increase in the number of loans issued, there has been an increase in overdue and bad debts to credit institutions. In this regard, the study of the development of credit history bureaus, as the most important tool for reducing credit risk, is relevant. The paper studies the process of formation of BKI in Russia, analyzes their activities, identifies the main problems, such as duplication of information in credit histories, the presence of erroneous information in them, and others. The prospects for further development are identified, in particular, the creation of qualified credit history bureaus, the use of more information sources in the formation of credit histories.

The role of finance in inclusive human development in Africa revisited

PurposeThis study aims to investigate the direct and indirect linkages between financial development and inclusive human development in African countries.Design/methodology/approachThe study employs a battery of estimation techniques, notably: two-stage least squares, fixed effects, generalized method of moments and Tobit regressions. The dependent variable is the inequality adjusted human development index. All dimensions of the Financial Development and Structure Database of the World Bank are considered.FindingsThe main finding is that financial dynamics of depth, activity and size improve inclusive human development, whereas the inability of banks to transform mobilized deposits into credit for financial access negatively affects inclusive human development.Practical implicationsPolicies should be tailored to improve mechanisms by which credit facilities can be provided to both households and business operators. Surplus liquidity issues resulting from the inability of banks to transform mobilized deposits into credit can be resolved by enhancing the introduction of information sharing offices (like public credit registries and private credit bureaus) that would reduce information asymmetry between lenders and borrowers.Originality/valueThis study complements the extant literature by assessing the nexus between financial development and inclusive human development in Africa.

RISKS OF LEASING OPERATIONS

The article deals with the issues of risks of lessees and lessors in leasing operations, the use of which is associated with a decrease in investment in fixed assets of enterprises. Attention is paid to risk management methods in leasing operations. It is noted that there are currently no clear methodological recommendations for combating risks in leasing activities. A brief statistical overview of the leasing market is given. The authors point out that currently, in order to combat risks, all leasing transactions will be transferred to credit bureaus. The conclusion is made about the need to minimize the risks of leasing operations.

FORMATION OF UKRAINE TRANSPARENCY BANKING

The article analyzes requirements of the National Bank of Ukraine for transparency of banks, banking groups and non-banking financial market participants. Transparency development process in the Ukrainian banking sector considered in a dynamic and in context of the EU's transparency requirements. Authors came to conclusion that the National Bank of Ukraine have to extended last achievements at banks transparency issues on activities of banking groups and to non-banking financial institutions. This conclusion based on rudiments of effective supervision of banking groups on a consolidated basis, as well as the adoption by the Verkhovna Rada of Ukraine of the Law on "Split". This law extends the National Bank's responsibility in the supervision of non-banking financial institutions (insurance, leasing, financial companies, credit unions, pawnshops and credit bureaus) since July 2020. Therefore, the National Bank should introduce new regulatory requirements to increase the transparency of banking groups and non-bank financial intermediaries. These reforms will establish uniform approaches and standards for disclosure of information on the activities of financial institutions, as well as provide the harmonization of national legislation with EU requirements. Expanding the list of public reporting information and establishing proper reporting intervals will ensure the stable functioning of the financial market and will increase the confidence in the financial system by the users of financial services. These measures will also help management of the financial organization to make informed decisions in defining their development strategy. Besides, they will provide further development of the competitive environment in the financial services industry. Keywords: transparency of banking system, transparency requirements, bank, banking group.