Financial Inclusion and Alternate Credit Scoring: Role of Big Data and Machine Learning in Fintech
By Shashwat Alok, Sumit Agarwal, Pulak Ghosh, Sudip Gupta
Journal of Money, Credit, and Banking
Citation
Alok, Shashwat., Agarwal, Sumit., Ghosh, Pulak., Gupta, Sudip. (2022). Financial Inclusion and Alternate Credit Scoring: Role of Big Data and Machine Learning in Fintech Journal of Money, Credit, and Banking .
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Journal of Money, Credit, and Banking, 2022
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Abstract
We use unique and proprietary data from a large Fintech lender and show that alternative data captured from an individual's mobile phone, such as the number and types of apps installed, measures of social connections, and borrowers' \deep social footprints" based on call logs, can substitute for traditional credit bureau scores in credit risk evaluation and improve financial inclusion. Using machine learning-based prediction counterfactual analysis, we find that alternate credit scoring based on an individual's digital presence can expand credit access for financially excluded individuals who lack credit scores without adversely impacting the default outcomes.

Shashwat Alok is an Associate Professor of Finance at the Indian School of Business (ISB). He joined ISB in 2013 after receiving his PhD in Finance from the Olin Business School, Washington University in St. Louis. He is currently the Research Director at the Digital Identity Research Initiative.

His primary research interests are in the areas of corporate finance. In particular, his research focuses on understanding the impact of the law, government policy, and institutions on firms and individual behaviour, with a greater focus on emerging markets. His recent work seeks to examine the role of alternative data and fintech in expanding financial inclusion, and the impact of climate change on firms and capital allocation.

Professor Alok is the recipient of multiple prestigious grants, and his work has been accepted at leading international conferences such as those hosted by the American Finance Association, the Asian Bureau of Finance and Economic Research, the European Finance Association, and the Financial Intermediation Research Society. His research has been published or accepted in top academic journals such as the Review of Financial Studies, Management Science, and the Journal of Financial and Quantitative Analysis. Prof Alok's research has been cited by the Indian Economic Survey (2018-2019) and the Reserve Bank of India's Household Finance Committee Report (2017). His research has also featured in major Indian media outlets, including the Economic Times and the Times of India.

Before joining the PhD programme, he graduated among the top of his class in Computer Science and Engineering from the Manipal University. He was the recipient of the Hubert C. Moog Scholar for academic excellence while pursuing his PhD at the Washington University in St Louis.

Shashwat Alok
Shashwat Alok