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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.

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.