14Jan 2022 by
One of those factors was credit risk. Credit risk is determined by the possibility of default. It is used for pricing debt instruments (mortgage, business, auto, credit card, etc.). This assignment will consider geospatial data and the application it might have in determining credit risk, and ultimately the interest rate charged (CLO #2, CLO #5).
For this assignment, consider one of the following employment scenarios:
Mortgage Originator at Spaceship Mortgage (a national financial firm) – as the originator you are responsible for working with the lender to determine credit worthiness. You have customers from all over the country applying for mortgages. You can use this geospatial data to inform your team about potential leads.
Portfolio Manager of a municipal bond fund at Goldman Lynch (investment bank) – as the portfolio manager you buy municipal bonds (debt) throughout the country. Your clients rely on your credit analysis to ensure that the municipalities (city, county, state, etc.) make payment and repay the debt on the bonds. You should have a diversified portfolio, but do the best to mitigate risk.
Credit Analyst at CarCredit (a national auto loan institution) – as the credit analyst you are responsible to estimate risk for new and used car loans throughout the country. Your role includes updating the team on potential concerns or risks that arise from lending individuals money.
Select one of the three positions listed above. In addition, you may want to research about that industry and the use of credit (mortgage, municipal debt, auto).
Review available references regarding credit and geospatial data:
Chapter 6.5 Corporate Bonds
Berk J., & Demarzo P. (2019). Corporate Finance. [VitalSource Bookshelf]. Retrieved from https://bookshelf.vitalsource.com/#/books/9780134997568/
Credit Risk Overview:
What is GIS:
GIS & Finance / Risk:
Review the 9 maps with finance, economic, and education data. Examine the data by zooming into the state, county, and even zip code level. You will choose 3 of the 9 maps that you believe could support business decisions at your selected role.
Deliverable: In a Word document, provide a 2-3 page paper that addresses the following:
Introduction: Provide a brief overview of the employment scenario you selected above (mortgage originator, portfolio manager, or credit analyst). Identify job functions or roles you would expect to have at the company. Include the opportunity for geospatial data and analytics to support your firm.
Body/Analysis: Identify each of the 3 maps selected from above. For each map you should include:
Explain the information provided in the map.
Are there any regional trends (i.e. Southwest, Georgia, Northeast, etc.)?
How could this map support credit risk analysis in your business line?
Did you find anything interesting about the data (location specific)?
Remember, GIS is a tool you can use to improve decision making at your company. Make sure to apply the data to the potential decisions being made (lending, investing, etc.).
Conclusion: Summarize your research and findings regarding the use of GIS and data analytics. Given the data you identified, would you feel more confident making a credit decision?