Posted 3/30/09
Loan-default models didn't warn of crisis
A researcher at the Stephen M. Ross School of Business says statistical models that predict loan defaults failed to warn lenders about risky borrowers because these models rely too much on hard information, such as credit scores and loan-to-value ratios, and not enough on soft information from personal contact with borrowers, such as a person's job security, upcoming expenses, or other observable behaviors that may help predict the likelihood of default. More > |