The failure of traditional finance approaches to account for market failures and the resulting financial crises has led to the emergence of a new discipline, Behavioural Finance, which builds on the insight provided by a number of behavioural principles developed in psychological, sociological and anthropological studies.
This survey opens with a brief outline of the basics of this new discipline against the background of the above-mentioned shortcomings of traditional finance approaches and is completed by an analysis of the principal axioms and thought processes constituting the theoretical underpinning of behavioural finance.
Subsequently, the author reports the findings of an empirical survey of the decision-making processes which are initiated upon the filing of a credit application in a sample of banking institutions operating in Campania, a region in southern Italy.
Ms Piccolo’s is the very first attempt to monitor the Italian banking sector through the lens of a new and comparatively ‘young’ discipline.
As her findings highlight significant correlations between the founding principles of behavioural finance and recurring mistakes made in the framework of credit initiation processes, they are evidence that the axioms of this discipline can play a role in streamlining traditional credit scoring models.