Online Data to Produce Credit Scores in China

Here’s a different approach to creating a credit score. Jack Ma, founder of the Chinese e-commerce giant Alibaba, has a new project to use online data for the many Chinese who lack traditional credit histories.

Neil Gough writes at the NY Times, “On Wednesday, Ant Financial Services, a privately held company controlled by Alibaba’s founder, Jack Ma, announced the introduction of the Sesame Credit Management Group, a credit-scoring business that will rely primarily on online data. … Ant wants to attract the millions of Chinese who lack established, traditional credit histories. …

“ ‘They may have never obtained bank loans or applied for credit cards,’ Yu Wujie, the chief data scientist of Sesame Credit, said in a statement. ‘However, they might be active Internet users who shop online a lot, e-pay their utility bills on time, have a stable residential status and have been using their mobile phone numbers for a long time. We will take these and other factors into consideration when assessing consumers’ creditworthiness.’ …

“Ant Financial is betting it can provide better financial information that will make credit more readily available to millions of people across China, benefiting not only consumers seeking loans but also landlords screening potential tenants, the lovelorn sizing up suitors and employers evaluating job candidates.”

More here.

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PowerMap Enables Citizen Involvement

 

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Sol Carbonell sent along a link to a new Microsoft mapping device that creates living histories of U.S. cities.

Lourdes German writes at Microsoft New England, “Fifty years ago the intellectual pioneer Jane Jacobs wrote in her seminal work, The Death and Life of Great American Cities, ‘designing a dream city is easy… rebuilding a living one takes imagination.’ Those words capture the essential challenges faced by government leaders entrusted with managing how communities are built. The remarkable relevance of these words stayed with me over the past decade in my work with governments across America, and as I embarked on a research endeavor focused on how government leaders finance the infrastructure of communities and the role civic technology can play to lend transparency to that process.

‘The two protagonists at the center of this story are: a government leader and their community. Government leaders are charged with making decisions about how critical infrastructure (roads, bridges, schools) is built and paid for. Citizens see the fabric of their communities change over time but often lack an understanding of the process behind strategic decisions. This lack of transparency has heightened importance when a city declares bankruptcy, as occurred in Detroit, and an ethos of confusion over the magnitude of fiscal distress and future capital investment becomes tenable.

‘I asked myself – how could I develop a body of work that empowers communities and citizens to bridge the information gap with each other? I answered that question by writing a book that explains how communities finance America. It presents an inside view of the decision-making process when leaders finance and build projects, and ways to understand the fragmented data points for communities as financial actors. Fueled by my desire for this book to be a living resource, I developed technology simulations, powered by Microsoft, that place the reader in the seat of a government leader to experience that process. The technology simulations offer dynamic visualizations of communities as engines of growth and change.” Learn all about it here.

And be sure to catch the upcoming Boston Fed Communities & Banking article that also flows from the work of Jane Jacobs, “Big Data, Small Buildings,” by Kennedy Smith, due March 1 on the Boston Fed website.

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Low-Income Vermonters Find Child Care Prohibitive

One reason it is so hard for families to move out of poverty is that taking a job means having to find someone to watch your children. Charlotte Albright at Vermont Public Radio reports that, in Vermont, child care is out of reach for many poor families.

“Vermont spent about 15 percent of its state budget on early childhood education in 2013. A little less than half of that expense supported K-3 education, and the rest targeted the needs of younger children. But many working families still cannot afford child care, according to a new report from an early childhood advocacy group.

“The update on state spending comes from Building Bright Futures, a non-profit that serves as Vermont’s advisory council for early education. It reports that the median rate for childcare in Vermont is just over $9,000 per child. That’s about one-third the median income of a single mother. For a single father, child care gobbles up about a quarter of annual earnings. Building Bright Futures Director Julie Coffey says those expenses make it tough for low-income families to enter and stay in the workforce. …

“Cost is not the only challenge. The other problem is statewide capacity. Coffey says there are not enough childcare programs for people who need them. According to the report, child care providers have the ability to serve about 27,500 children – but at least twice that many would enroll, if there were affordable slots for them.” Read more here.

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The Role of Race in Mortgage Lending

Kevin Lewis at the Boston Globe highlights new research confirming the perception that some prerecession mortgage lending was racially biased.

Lewis summarizes, “Not that the prerecession mortgage market needs any more criticism, but a new analysis of mortgage and credit data by several economists confirms that race was a significant factor in the market. Even controlling for borrower and mortgage characteristics like credit scores, loan-to-value ratios, and expense-to-income ratios, African-American and Hispanic borrowers were more likely—by 7.7 and 6.2 percentage points, respectively—to receive a high-cost mortgage when buying a home. This was true in various cities and among people with good credit, but was concentrated in neighborhoods of low socioeconomic status. … Bayer, P. et al., “Race, Ethnicity and High-Cost Mortgage Lending,” National Bureau of Economic Research (December 2014).” More here.

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Job Growth Climbing in New Hampshire

Massachusetts has being getting a lot of press about how well it is bouncing back after the Great Recession, but other states in the Boston Fed’s region are perking up, too. For example, as Michael Cousineau reports at the Union Leader, New Hampshire job growth is climbing.

“New Hampshire businesses added 8,600 jobs last year — the most since 2005,” he writes, “and last month registered more jobs than before the Great Recession hit in late 2007, according to a Union Leader review.

” ‘The recovery is accelerating,’ said Dennis Delay, economist for the New Hampshire Center for Public Policy Studies in Concord. ‘That is really good news.’ …

“Last year’s job gains reflected the biggest yearly jump since 2005, when 10,800 jobs were added that calendar year, according to figures from the state Economic and Labor Market Information Bureau.

“Michael Skelton, president and CEO of the Greater Manchester Chamber of Commerce, said the jobs picture is improving.

” ‘I think it is reflected in the unemployment rate that as we’ve recovered from the recession over the last few years, employers have been cautious but have been able to slowly rebuild and add more jobs as the economy has improved,’ said Skelton, who leads the 900-member organization.

“New Hampshire’s unemployment rate in December stood at 4 percent compared to 5.2 percent in December 2013. Leading the growth in jobs during 2014 was education and health services fields, with 3,000 jobs added, according to Anita Josten, a labor bureau research analyst.” See more at the Union Leader, here.

The Boston Fed covers Maine, New Hampshire, Vermont, Massachusetts, Connecticut, and Rhode Island.

Photo: Claremont, New Hampshire
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Credit Unions Reaching Out to Latinos

Coopera and the National Federation of Community Development Credit Unions have announced “the launch of a national campaign to reach unbanked and underbanked immigrants in the US with credit union products and services linked to immigration and legalization efforts,” a joint press release states.

“The campaign addresses immigrant needs regardless of country of origin but includes a special focus on Hispanic immigrants, the nation’s largest minority and one of the fastest growing. Events include webinars” such as Immigration Executive Order and Financial Inclusion Webinar: Part 2, which is scheduled for February 11, 2015, and focuses on … the immediate financial needs facing Hispanic immigrants as well as best practices for the launch of or expansion of credit union strategy to service this market.

” ‘Regardless of the political nuance of the president’s action, these changes to the current immigration system have tremendous economic benefits for the country, including more job creation and tax revenue,’ said Miriam De Dios, CEO of Coopera. ‘In addition, it means membership growth for credit unions. As undocumented immigrants are able to file for temporary immigration status and receive an identification card and work authorization, they will seek new jobs, obtain driver’s licenses and open financial institution accounts.” More at www.CooperaConsulting.com.

In Rhode Island, the nonprofit Capital Good Fund is hoping to partner with financial institutions to make loans to those affected by the executive order so that the immigrants can pay any legal or application fees.

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Some Sectors Trying to Keep Older Workers

Yuki Noguchi writes at National Public Radio (NPR), “In the U.S., roughly 10,000 people reach retirement age every day. And though not everyone who turns 62 or 65 retires right away, enough do that some companies are trying to head off the problem. …

“Losing veteran workers is a challenge, even for big companies. …

“The need is not across the board; not all retirees are in demand. But the older-worker brain drain is a big concern for industries like mining and health care. They are trying to retain older employees because demand is increasing and fewer younger workers are rising through the ranks.

“In a survey out this week, the Society for Human Resource Management reports that a third of employers expect staffing problems in coming years.

” ‘When you have large numbers that are leaving and a pipeline that is not entirely as wide as the exit pipeline, you will have temporary gaps,’ says Mark Schmit, executive director of the association’s research arm. …

“Employers are trying to hang onto older talent by offering flexible work hours, more attractive health care benefits or having retirees return to mentor younger workers. And more people are, in fact, working later — either because they want to, or they have to. According to AARP, nearly 19 percent of workers over age 65 work (about 1 in 5), compared with about 11 percent (1 in 10) three decades ago.”

More here.

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