Journal of Business Ethics

, Volume 133, Issue 4, pp 691–701 | Cite as

A Credit Score System for Socially Responsible Lending

  • Begoña Gutiérrez-Nieto
  • Carlos Serrano-Cinca
  • Juan Camón-Cala


Ethical banking, microfinance institutions or certain credit cooperatives, among others, grant socially responsible loans. This paper presents a credit score system for them. The model evaluates social and financial aspects of the borrower. The financial aspects are evaluated under the conventional banking framework, by analysing accounting statements and financial projections. The social aspects try to quantify the loan impact on the achievement of Millennium Development Goals such as employment, education, environment, health or community impact. The social credit score model should incorporate the lender’s know-how and should also be coherent with its mission. This is done using Multi-Criteria Decision Making (MCDM). The paper illustrates a real case: a loan application by a social entrepreneur presented to a socially responsible lender. The decision support system not only produces a score, but also reveals strengths and weaknesses of the application.


Ethical banking Social impact assessment Credit scoring Multi-criteria decision making (MCDM) Financial ratios 



The work reported in this paper was supported by Grants ECO2010-20228 and ECO2013-45568-R of the Spanish Ministry of Education and Science, and the European Regional Development Fund and by grant Ref. S-14 (3) of the Government of Aragon. We are especially grateful to Coop57 Aragon and La Veloz staff for their support in this research.


  1. Aczel, J., & Saaty, T. L. (1983). Procedures for synthesizing ratio judgments. Journal of Mathematical Psychology, 27(1), 93–102.CrossRefGoogle Scholar
  2. Ambec, S., & Treich, N. (2007). Roscas as financial agreements to cope with self-control. Journal of Development Economics, 82(1), 120–137.CrossRefGoogle Scholar
  3. Appleyard, L. (2011). Community development finance institutions (CDFIs): Geographies of financial inclusion in the US and UK. Geoforum, 42(2), 250–258.CrossRefGoogle Scholar
  4. Becker, H. A. (2001). Social impact assessment. European Journal of Operational Research, 128(2), 311–321.CrossRefGoogle Scholar
  5. Belton, V., & Gear, T. (1983). On a short-coming of Saaty’s method of analytic hierarchies. Omega, 11, 228–230.CrossRefGoogle Scholar
  6. BIS (2004). International Convergence of Capital Measurement and Capital Standards, A Revised Framework, Basel Committee on Banking Supervision, Bank for International Settlements (BIS) Basel, Switzerland.Google Scholar
  7. Bouman, F. J. A. (1995). Rotating and accumulating savings and credit associations: A development perspective. World Development, 23(3), 371–384.CrossRefGoogle Scholar
  8. Burdge, R. J. (2003). The practice of social impact assessment. Impact Assessment and Project Appraisal, 21(2), 84–88.CrossRefGoogle Scholar
  9. Buttle, M. (2007). I’m not in it for the money: Constructing and mediating ethical reconnections in UK social banking. Geoforum, 38(6), 1076–1088.CrossRefGoogle Scholar
  10. CGAP (2011). Measuring changes in client lives through microfinance: Contributions of different approaches. CGAP brief. Consultative Group to Assist the Poorest, World Bank, Washington DC.Google Scholar
  11. Davis, F. D. (1989). Perceived usefulness, perceived ease of use, and user acceptance of information technology. MIS Quarterly, 13(3), 319–340.CrossRefGoogle Scholar
  12. Dyer, J. S. (1990). Remarks on the analytic hierarchy process. Management Science, 36, 249–258.CrossRefGoogle Scholar
  13. Elkington, J. (1997). Cannibals with forks: The triple bottom line of 21st century business. Gabriola Island: New Society Publishers.Google Scholar
  14. Fock, H., Chan, A., & Yan, D. (2011). Member-organization connection impacts in affinity marketing. Journal of Business Research, 64(7), 672–679.CrossRefGoogle Scholar
  15. Forbes, D. (1998). Measuring the unmeasurable. Nonprofit and Voluntary Sector Quarterly, 27(2), 183–202.CrossRefGoogle Scholar
  16. Frame, B., & O’Connor, M. (2011). Integrating valuation and deliberation: the purposes of sustainability assessment. Environmental Science & Policy, 14(1), 1–10.CrossRefGoogle Scholar
  17. Goddard, J. A., McKillop, D. G., & Wilson, J. O. S. (2002). The growth of US credit unions. Journal of Banking & Finance, 26(12), 2327–2356.CrossRefGoogle Scholar
  18. Grace, T. R. L., & Tang, J. Y. H. (2009). Appraising intangible assets from the viewpoint of value drivers. Journal of Business Ethics, 88(4), 679–689.CrossRefGoogle Scholar
  19. Graham, J., & Harvey, C. (2002). How do CFOs make capital budgeting and capital structure decisions? Journal of Applied Corporate Finance, 15(1), 8–23.CrossRefGoogle Scholar
  20. GRI (2011). Sustainability reporting guidelines, version 3.1. Global Reporting Initiative. Accessed June 24, 2011, from
  21. Gutiérrez-Nieto, B., Serrano-Cinca, C., & Mar-Molinero, C. (2009). Social efficiency in microfinance institutions. Journal of the Operational Research Society, 60(1), 104–119.CrossRefGoogle Scholar
  22. Harris, J. D., Sapienza, H. J., & Bowie, N. E. (2009). Ethics and entrepreneurship. Journal of Business Venturing, 24(5), 407–418.CrossRefGoogle Scholar
  23. IAIA (2011). What is impact assessment? International Association for Impact Assessment. Accessed June 24, 2011, from
  24. Johnson, S. A., & Sarkar, S. K. (1996). The valuation effects of the 1977 community reinvestment act and its enforcement. Journal of Banking & Finance, 20(5), 783–803.CrossRefGoogle Scholar
  25. Keeney, R. L., & Raiffa, H. (1976). Decisions with multiple objectives: Preferences and value tradeoffs. New York: Wiley.Google Scholar
  26. Lewellen, W. G. (1977). Some observations on risk-adjusted discount rates. The Journal of Finance, 32(4), 1331–1337.CrossRefGoogle Scholar
  27. Millet, I. (1998). Ethical decision making using the analytic hierarchy process. Journal of Business Ethics, 17(11), 1197–1204.CrossRefGoogle Scholar
  28. Moneva, J. M., Archel, P., & Correa, C. (2006). GRI and the camouflaging of corporate unsustainability. Accounting Forum, 30(2), 121–137.CrossRefGoogle Scholar
  29. Morduch, J. (1999). The microfinance promise. Journal of Economic Literature, 37(4), 1569–1614.CrossRefGoogle Scholar
  30. Peters, M., & Zelewski, S. (2008). Pitfalls in the application of analytic hierarchy process to performance measurement. Management Decision, 46(7), 1039–1051.CrossRefGoogle Scholar
  31. REDF. (2001). SROI methodology: A social return on investment, analyzing the value of social purpose enterprise within a social return on investment framework. San Francisco: Roberts Enterprise Development Fund, The Roberts Foundation.Google Scholar
  32. Ruf, B. M., Muralidhar, K., & Paul, K. (1998). The development of a systematic, aggregate measure of corporate social performance. Journal of Management, 24(1), 119–133.CrossRefGoogle Scholar
  33. Saaty, T. L. (1980). The analytic hierarchy process. New York: McGraw-Hill.Google Scholar
  34. Saaty, T. L. (2013). The modern science of multicriteria decision making and its practical applications: The AHP/ANP approach. Operations Research, 61(5), 1101–1118.Google Scholar
  35. Schaefer, H. (2004). Ethical investment of German non-profit organizations: Conceptual outline and empirical results. Business Ethics: A European Review, 13(4), 269–286.CrossRefGoogle Scholar
  36. Schreiner, M. (2002). Scoring: The next breakthrough in microfinance? Occasional Paper 7. Consultative group to assist the poorest (CGAP). Washington DC.Google Scholar
  37. Searcy, C. (2012). Corporate sustainability performance measurement systems: A review and research agenda. Journal of Business Ethics, 107, 239–253.CrossRefGoogle Scholar
  38. Smith, J. E., & von Winterfeldt, D. (2004). Decision analysis in management science. Management Science, 50(5), 561–574.CrossRefGoogle Scholar
  39. Stein, E. W., & Ahmad, N. (2009). Using the analytical hierarchy process (AHP) to construct a measure of the magnitude of consequences component of moral intensity. Journal of Business Ethics, 89(3), 391–407.CrossRefGoogle Scholar
  40. Steuer, R. E., & Na, P. (2003). Multiple criteria decision making combined with finance: A categorized bibliographic study. European Journal of Operational Research, 150(3), 496–515.CrossRefGoogle Scholar
  41. Sveiby, K. (1997). The new organizational wealth: managing and measuring knowledge-based assets. New York, NY: Berrett-Koehler.Google Scholar
  42. Triodos Bank (2011). Triodos Bank’s approach to lending. Accessed June 24, 2011 from
  43. Tsai, W.-H., & Chou, W.-C. (2009). Selecting management systems for sustainable development in SMEs: A novel hybrid model based on DEMATEL, ANP, and ZOGP. Expert Systems with Applications, 36(2), 1444–1458.CrossRefGoogle Scholar
  44. Tsang, K. H., Samsatli, N. J., & Shah, N. (2007). Capacity investment planning for multiple vaccines under uncertainty: 2: Financial risk analysis. Food and Bioproducts Processing, 85(2), 129–140.CrossRefGoogle Scholar
  45. Vanclay, F. (2010). The triple bottom line and impact assessment: How do TBL, EIA, SIA, SEA and EMS relate to each other? In W. R. Sheate (Ed.), Tools, techniques and approaches for sustainability (pp. 101–124). Singapore: World Scientific Publishing.Google Scholar
  46. Yurdakul, M., & Iç, Y. T. (2004). AHP approach in the credit evaluation of the manufacturing firms in Turkey. International Journal of Production Economics, 88(3), 269–289.CrossRefGoogle Scholar
  47. Zahra, S. A., Gedajlovic, E., Neubaum, D. O., & Shulman, J. M. (2009). A typology of social entrepreneurs: Motives, search processes and ethical challenges. Journal of Business Venturing, 24(5), 519–532.CrossRefGoogle Scholar

Copyright information

© Springer Science+Business Media Dordrecht 2014

Authors and Affiliations

  • Begoña Gutiérrez-Nieto
    • 1
  • Carlos Serrano-Cinca
    • 1
  • Juan Camón-Cala
    • 1
  1. 1.Department of Accounting and FinanceUniversidad de ZaragozaSaragossaSpain

Personalised recommendations