The Surprising Use of Credit Scoring in Small Business Lending by Community Banks and the Attendant Effects on Credit Availability and RiskÂ
Allen N. Berger, Adrian M. Cowan, and W. Scott FrameÂ
Working Paper 2009-9
March 2009
From the write-up at the Federal Reserve Bank of Atlanta Website:
“Our empirical analysis suggests that credit scoring is associated with increased small business lending after a learning period, with no material change in the quality of the loan portfolio. However, these quantity and quality results appear to vary depending on the way in which credit scores are implemented in the underwriting process.”