When a bank considers a loan, it looks at the borrower’s income, assets, credit history, and plans for the money. On microloan websites, lenders have one other way to evaluate a borrower’s creditworthiness. They can observe the behavior of other lenders. With a colleague, Peng Liu of Cornell University, I have been studying Prosper.com, the […]
Tag Archives: credit rating
After the Debt Ceiling Debate and S & P’s Credit Downgrade, Picking an Investment Adviser in an Unruly Market: S.P. Kothari
From Dow Jones Marketwatch S.P. Kothari, deputy dean at the MIT Sloan School of Management and a former Barclays fund manager, talks about what investors should look for in choosing an investment adviser to steer them through these turbulent markets. What do you think?
My latest paper* focuses on the difficulties that rating agencies face in setting a credit score that accurately reflects the credit quality of a borrower, but also takes into account the effect that score will have on the borrower’s credit quality in the future. When a rating agency cuts a given company’s credit rating, investor […]