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 banks’ 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 customers’ 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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