Application Of Logistic Regression Model In Consumer Loans Credit Scoring
Volume 4 - Issue 5, May 2020 Edition
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Hoang Thanh Hai, Dong Thi Hong Ngoc
credit scoring model, logistic regression, probability of a loan to be good, profit
Credit scoring is one of the most crucial processes in banksâ€™ credit management decisions. Various scoring techniques have been suggested to assess clients' creditworthiness during the last few decades. In this paper, we use logistic regression to construct a classification model based on data on 1000 loan applicants in Germany. This model is used to examine the correlation between customersâ€™ characteristics and the probability of their loans to be good. Finally, we assess the benefits of banks when using this model in terms of profit.
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