Loan Participations, CECL, Stress Testing, Loan Modeling for Banks and Credit Unions
Quantifying Adverse Selection in a Dynamic Environment
by Joseph L. Breeden, PhD On April 14, 12pm US MT
Residual credit risk has been trending since mid-2021, possibly due to bureau score inflation. Rising interest rates through 2022 could push adverse selection further into risky territory. We will discuss the drivers of adverse selection, how to quantify adverse selection for campaign tracking, and what actions lenders can take to compensate.