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What will be interesting is when it becomes clear to china banks that the 'social score' is a poor metric for credit worthiness. My bet is that they will quick
by siliconc0w 10y ago
What will be interesting is when it becomes clear to china banks that the 'social score' is a poor metric for credit worthiness. My bet is that they will quickly and quietly go back to weighting FICO-style metrics (i.e history of repayment).
- mattnewton 10y agoWill they? I think that social capital will be worth more than the money because it's what keeps the men-with-guns on your side. If they are serious about making it hard for the "discredited to take a single step" then how angry the government is at you is a good predictor of you ability to pay. If you are talking about the incentive for a bank to defect and lend to people who could repay but have a poor score, that would be very interesting, but I am not sure I see how likely that is to be a real arbitrage opportunity if everyone else is on the same page as the government re: the score.
- zhemao 10y agoWell all the banks are state-owned, so it's kind of a moot point. They'll go along with whatever the government decides.
- candiodari 10y agoUntil it requires a denial of reality so great that it simply can't work. That usually doesn't take more than a decade or so.
- rm_-rf_slash 10y agoBut it does kind of make sense in China. If a prospective client has a solid history of paying debts on a timely basis as well as well-documented statements of dissent or disapproval on Chinese social media, that person is more likely to be arrested and therefore less likely to be able to pay the debts back, which has the double effect of more accurately estimating credit worthiness as well as punishing dissidents in advance.
- swuecho 10y agoI do not think anyone will use the 'social score' descripted in the article, except the china in the author's imagination or in reader's probably if the author is successful. The article is kind of propaganda.