A Longitudinal Systematic Review of Credit Risk Assessment and Credit Default Predictors

This study aims to reveal the predictors of individuals’ financial behavior associated with credit default for accurate and reliable credit risk assessment. Within the scope of credit use research, a systematic review of 108 studies was performed. Among the reviewed studies, a fair number have analyzed the determinants of default and delinquency. A remarkable number has examined the factors affecting outstanding and problematic debt levels, and some have investigated the financial behavior in terms of responsibility, debt repayment, and credit misuse. A wide range of socioeconomic, demographic, psychological, situational, and behavioral factors was explored, and their role in predicting the investigated outcome domain at various time-points was analyzed. The main analysis techniques and mix of predictors in papers also differed based on different time periods. While the synthesis of findings revealed some strong and consistent predictors for each outcome variable, mixed results were obtained for some factors. Additionally, a cluster of new practices that includes a wide range of alternative factors to improve prediction accuracies were uncovered. Study findings revealed a paradigm shift regarding the use of non-traditional data sources, especially big data, and novel techniques.