Conference Paper
“The New Normal Era: Looking for Recovery Strategies for Economy and Businesses”
The First International Conference of Economy, 16 November 2021, Jakarta

Role of Fintech for Credit Analysis of MSMEs

Geetha Rajaram

International School of Management Excellence, Research Centre, affiliated to Mysore University
Bangalore, India
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Vidya CM

International School of Management Excellence, Research Centre, affiliated to Mysore University
Bangalore, India
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Abstract

Financial technology or fintech is used extensively in evaluation of the creditworthiness of a business or organization. The primary problem faced by small and medium enterprises is obtaining loan for starting or improving their business, due to lack of hard information and good repute. Sources for hard information are historic data like audited balance sheets, forecasts in the form of budgets and cash flow, ratings given by credit rating companies, analysis of ratios, capital marketization, share prices and many more benchmarks. Micro, small and medium enterprises (MSMEs) face the problem of information asymmetry. In other words, it is the analysis of the ability of a company to honor its financial obligations. The in thing in today’s world is “big data”. The credit rating companies have experienced a sea change. Numerus data is collected every second from various sources, social media sites, online purchases, off-line purchases. The emerging era of credit analysis is based on consumer behavior, the likes and dislikes one expresses on social media sites to the analysis on one’s preference for the products they purchase, to the emotions one expresses, everything is recorded through data “Big Data”. Each and everything are accessible within minutes, to know whether a person is worthy of credit or not. All these are studied through complicated mathematical computations to analyze sequences of information within an ocean of data. These credit scorings can be provided within no time and are equally cost efficient, but it is also intruding to one’s privacy. The study is on how effective is Big Data for credit analysis.

Keywords: Big Data, data mining, credit analysis, credit scoring, fintech


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International Journal of Small and Medium Enterprises and Business Sustainability
Volume 07 No. 01 March 2022