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The important statistical issues arising due to the failure to consider situational circumstances, that may affect the ability of scoring systems to accurately quantify an individual credit risk, are described. The practical difficulties, associated with developing scoring models that incorporate situational data are described.

Personal commitment is found to have a significant effect on small business credit availability as it is more important for certain types of firms seeking certain types of loans. Findings suggest that personal collateral is less prevalent than personal guarantees, that firm corporations more likely associated with guarantees than unincorporated companies and that personal substitutes are substitutes for business collateral.

The effects of the quantity and information source flow on the lenders' credit decisions were determined based on the currently revised Community Reinvestment Act (RCA) regulations. Findings reveal that lenders can sometimes exploit economies of scale in gathering information at certain neighborhoods. Lenders are at a disadvantage in areas where concentrated competition is limited to a number of qualified mortgage applicants. Implementation of the current RCA regulations provides greater scope for lenders to pool their resources in achieving critical mass of applications needed for exploiting economies of scale., Evidence shows that by focusing on certain neighborhoods, lenders can sometimes exploit economies of scale in the collection of information. They can also find themselves at a disadvantage in areas [...]

A high loan denial rate for minorities does not necessarily demonstrate racial bias on the part of the lender. Recent studies have focussed on the loan denial rate as an indicator of home mortgage lenders' compliance with the Fair Housing Act, the Equal Credit Opportunity Act, and the Community Reinvestment Act. This statistic unfairly penalizes the lender who solicits and receives many applications for minorities and thus may post a higher loan denial rate than the lender who receives applications only from whites. It also disregards company-to-company differences in loan practices.

Consolidation in the banking industry appears to reduce the level of bank branching as indicated by the number of offices per capita in a particular region. This is especially true for mergers in which merger partners have branch networks that overlap within a ZIP code both in urban and rural areas. In addition, there is no significant relationship between consolidation and the competitive and market environments or between consolidation and the racial composition of the ZIP code.

Two separate papers by authors Hancock, Laing and Wilcox, on one hand, and Peek and Rosengren, on the other, deal with the relationship between bank action and the economic and regulatory developments during a period of tight credit. The first set of authors point out the capital and securities reacted faster to shocks that the rest of bank activities. The second set of authors had a narrower focus: the effect of regulation on New England banks.

In November 1999, the U.S. Congress asked the Board of Governors of the Federal Reserve System to conduct a comprehensive study of loans made under the Community Reinvestment Act of [...]

Evidence from the Federal Reserve Board's 1983 and 1986 surveys of consumer finances show an increase in consumer debt and some trends relating to income, automobile purchases, and credit card use. Demographic changes between 1983 and 1986 may have contributed to a reduction in consumer debt because the increase in high-debt families headed by someone between 25 and 45 years old, was counteracted by a greater increase in low-debt households headed by older unmarried people. The number of families with both credit card debt and closed-end debt, such as automobile loans, increased 5.7% between 1983 and 1986. The results also indicate that relatively wealthy people were more likely than others to have both credit card and closed-end debt. The data also suggests that consumers may be replacing some of their traditional dependence on taxable consumer credit with tax deductible home mortgage loans.

The Survey of Consumer Finances, 1983 sponsored by five government agencies, including the Department of Health and Human Services and the Board of Governors of the Federal Reserve System, provides comprehensive data relating to the assets and liabilities of the 3,824 American households surveyed, information regarding use of financial services, pensions, and attitudes toward consumer credit regulations. Survey results indicate that the largest financial obligation of American families is mortgage debt, with the mean mortgage valued at $27,147. Families having a net worth in excess of $25,000 increased to 50 percent in 1983 from 22 percent in 1970 and 38 percent in 1977. Unmarried persons have the smallest net worth, while figures indicate that net worth increases with age, income, and education (except for the oldest age group).

An overview of surveys published in the Federal Reserve Board's Bulletin showed several trends in consumer instalment debt. In 1986, consumer instalment debt reached its highest level compared to disposable income. The stock of debt has risen faster than debt service payments. Consumers have changed their preference in credit vehicles. Consumer credit is being replaced by mortgage credit because of tax changes and promotion of home equity credit. The ratio of income to payments shows that families' debt burdens vary considerably over time. Of the families with consumer instalment debt, 80% have sufficient assets to liquidate their debts in emergencies.