2023-07-24 18:32:17
At the beginning of 2018, approximately 45% of households residing in France were in debt, whether for private or professional reasons, for a average amount 79,200 euros. This represented 13% of their total assets. Several factors, societal or specific to individuals, favor indebtedness. There is, of course, inflation, the instability of the key rate or even social inequalities. For the 10% of the least well-endowed households, debts represent up to 38% of their assets.
Beyond their economic situation, certain types of people exhibit tendencies towards over-indebtedness because of their profile. They can be recognized by three traits:
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Their disconnection from their financial needs, goals and preferences: the borrower loses contact with reality, particularly due to financial stress or environmental pressures.
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Their lack of rationality, which describes suboptimal financial decisions, such as the lack of diversification of an investment portfolio, the payment of debts with high interest rates instead of favoring those with low interest rates, or compulsive and unnecessary purchases.
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The tendency to adopt dishonest behavior to obtain funds, especially when the pressure due to indebtedness becomes unsustainable, or when greed prevails, fueled by a highly speculative market (bull market) that promises quick and easy substantial gains.
The combination of these three traits, which we have designated in a research by the term “dark financial profile”, can only lead to disaster (bankruptcy, bankruptcy, problems with usurpers or illegal lenders). Indeed, the more the debt becomes unsustainable, the more the stress increases, causing a gap with a reality that is too difficult to accept. The individual then makes bad financial decisions, which increase his debt.
“Wheel of Misfortune”
To get out of it, he rushes to his banker. He does not tell her the whole truth regarding his financial worries, embellishes his income, promises to respect his commitments, knowing that this is false. If he obtains the coveted loan, his bad habits being entrenched, he will not get out of his mess any more, on the contrary. The money obtained will be used to fund his “wheel of misfortune”. The borrower becomes a hamster that turns its endless wheel, in the cage that confines it, which is none other than the trapdoor of its debt.
We must bring the triangle closer to the dark financial profile, which can be circumstantial (hence the term profile and not personality) of other well-established triads. THE fraud triangle has for edges the need (the pressure), the opportunity and the rationalization. Thus, a financial advisor will want to impress and enjoy a wealthy standard of living; he will bet on the vulnerability of investors who believe in him and will justify his predatory actions by blaming their naivety and the weakness of market regulators (such as the Autorité des marchés financiers, or AMF, in France).
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Likewise, the triangle de Karpman (1968) qualifies transactional power relations according to three roles: the victim (the lender who is taken in by the lies of the borrower), the persecutor or predator (the borrower who consciously deceives the lender, or the usurious lender who seeks to be reimbursed, and the savior (the lender/banker who thinks he is doing the right thing).
All these triads have in common the devastating effect on others, and eventually on oneself, the interdependence of traits, which therefore combine to form a toxic, sometimes deceptive and remorseless personality.
A widespread risk
When granting a loan, the bank will therefore seek to recognize these patterns behavioral so as not to end up with an insolvent client. To better inform the lender, I have developed a measurement scale that measures the possibility of deception of a borrower. It takes credit history into account (credit score), their socio-demographic profile and their results on this questionnaire (research article to be published in the journal Journal of Economic Issues).
In this one, obviously, one cannot directly ask the question: “Are you dishonest?” » However, it is possible to obtain an approximation of the possibility of resorting to lies by using the recognized technique of linguistic inquiry and word count (LIWC). This method was designed to evaluate stories according to four key criteria: formal thought, influence, authenticity (false) and emotional tone. My questionnaire therefore contains questions developed on this scientific basis.
My research tends to show that the likelihood of a borrower being deceived is increased by the presence of a bad credit history and a high level of debt, as well as by the existence of risky behaviors. They demonstrate that the underlying force behind deception is a loop in the form of risky behaviors → disconnection → irrationality → risky behaviors. Thus, it is possible to get a relatively precise idea of the real intention or the real repayment capacity of the borrowers.
More surprisingly, a significant number of my research participants admitted to using deception or chose accounts that suggested deception. THE dark financial profile thus constitutes the indicator of a relatively widespread risk. This point takes on crucial importance if we consider the emergence of online loan platforms between individuals (peer-to-peer lending) such as LendingClub or Prosper, or participatory financing (crowdfunding), especially since face-to-face contact with all that it implies of body language is absent.
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