Can we trust machine learning to predict the credit risk of small businesses?
Alessandro Bitetto,
Paola Cerchiello,
Stefano Filomeni
et al.
Abstract:With the emergence of Fintech lending, small firms can benefit from new channels of financing. In this setting, the creditworthiness and the decision to extend credit are often based on standardized and advanced machine-learning techniques that employ limited information. This paper investigates the ability of machine learning to correctly predict credit risk ratings for small firms. By employing a unique proprietary dataset on invoice lending activities, this paper shows that machine learning techniques overp… Show more
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