QUANTITATIVE ASSESSMENT OF BORROWER BEHAVIOR: INTRODUCING ACTIVITY SCORING

The article proposes a novel quantitative tool «activity scoring» aimed at addressing challenges in group lending and microfinance. Unlike traditional credit scoring models that rely on borrower characteristics and historical loan performance, activity scoring focuses exclusively on the actions of individual borrowers. By implementing a point-based system, borrowers earn points for positive behaviors, such as timely loan repayments, while incurring penalties for negative actions, like missed payments. This approach not only incentivizes responsible borrowing but also enhances the predictive power of risk assessment by capturing a broader range of borrower activities. The article outlines the theoretical underpinnings of activity scoring, compares it to existing credit scoring methods, and highlights its potential benefits, including improved loan repayment rates, better client segmentation, and reduced reliance on subjective assessments by loan officers. Furthermore, the tool fosters transparency within microfinance institutions (MFIs) and facilitates information sharing. By emphasizing borrower engagement and performance, activity scoring offers a promising avenue for increasing the efficiency and effectiveness of microfinance operations, ultimately contributing to the sustainability of lending practices in developing economies. Keywords: Activity scoring, microfinance, risk assessment, borrower behavior, credit scoring, loan repayment rate, quantitative tool.