There was a recent article in Businessweek about the use of assessments to help banks in developing countries to identify those individuals who are likely to be good candidates for loans. The assessment looks at traits such as integrity, motivation, and intelligence. It is reported to work as well as (or better than) traditional methods of assessing creditworthiness with claims it can reduce default rates up to 40%.

I have heard of other organizations that have developed assessments for similar purposes. There is little reason to think such an approach would not have some measure of efficacy, especially in developing nations where most individuals have little to no exposure to formalized banking which makes credit history difficult to obtain. As such, psychometric assessment data may be one of the few pieces of objective information available upon which to base a loan decision. While testing loan applicants in the U.S.  would likely run afoul of a number of a legal, business, and cultural barriers, it is still an interesting concept to ponder as well as a rather unique example of the innovative use of assessments.

Reid Klion