Abstract:Multiple discriminant analysis (MDA) is frequently used to develop statistical credit-scoring models for loan evaluation purposes. Current legislative efforts to insure that credit is being granted in a nondiscriminatory manner have focused considerable attention on the reliability of such models. This article examines the theoretical requirements of the MDA model in the context of a realistic lending situation and illustrates the extent of bias when these theoretical assumptions are not fully met. The article… Show more
“…Identifying those consolidated or potential customers which no generate a business entity, it is necessary to adopt guidelines on best treatment and provisions in case of default and / or migration from buckets of default to buckets as write-down, such is the case with the investigations of Hsia (1978), which describe the importance of scoring methods. In other way, researches of computed data are suggested by Reichert, Cho and Wagner (1983), Joanes (1993) Hand and Henley (1997); detailing the study of particular relationships between the distributions of good and bad customers with the ability to accept and reject people with similar features.…”
This research suggests a particular probability of default model to
Microfinances Regulated in Mexico (SOFOM ER), based on the use of own mixed
variables (continuous and dichotomous) according to the credit behavior and the
optimization by maximum likelihood. Financial indicators such as savings, assets and
profits were used nationwide to reaffirm an implementation of new and more profitable
model in the sector of Mexico, indicating a yield of about 4% with the optimized credit
model. Within the limitations of the research lies the lack of robust information and
free consultation, due to bank secrecy in Mexico.
“…Identifying those consolidated or potential customers which no generate a business entity, it is necessary to adopt guidelines on best treatment and provisions in case of default and / or migration from buckets of default to buckets as write-down, such is the case with the investigations of Hsia (1978), which describe the importance of scoring methods. In other way, researches of computed data are suggested by Reichert, Cho and Wagner (1983), Joanes (1993) Hand and Henley (1997); detailing the study of particular relationships between the distributions of good and bad customers with the ability to accept and reject people with similar features.…”
This research suggests a particular probability of default model to
Microfinances Regulated in Mexico (SOFOM ER), based on the use of own mixed
variables (continuous and dichotomous) according to the credit behavior and the
optimization by maximum likelihood. Financial indicators such as savings, assets and
profits were used nationwide to reaffirm an implementation of new and more profitable
model in the sector of Mexico, indicating a yield of about 4% with the optimized credit
model. Within the limitations of the research lies the lack of robust information and
free consultation, due to bank secrecy in Mexico.
“…The proposed method is based upon the assumption of normality distributed data. However, Reichert et al, (1983) proposed that the non-normality of credit information does not provide a limitation for the empirical utilization of the method. Another argument is that the problem of non-normality can be overcome by using a logit model (Wiginton, 1980), a model that is not selected for examination in this paper.…”
The paper attempts to determine whether there exists a relationship between the on-time payments of credit card owners of a Commercial Bank and their demographic characteristics (particular personal and family status). It evaluates the statistical technique of discriminant analysis on credit card customers' data of a Greek Commercial Bank and examine whether it is possible to create a model evaluating the credibility of prospective credit-card customer. The sample includes personal data, as well as, payment consistency for 829 customers of the Greek Commercial Bank (X-BANK) of average size.The statistical analysis of the sample data included the identification of the relationship between the theoretical and empirical prices of the distributions of the bank customers' specific variables and discriminant analysis. The results showed that establishing a model to evaluate the credibility of prospective bank card customers, using the technique of the linear discriminant analysis, is not possible. The findings prove interesting and useful for all bank managers. The paper contributes to the financial services literature by adding a further critical analysis into credit scoring systems established by several banking institutions.
“…Logistic regression is often used to establish binary classification as an alternative to linear discriminant analysis. This obviates the unreasonable assumption that covariance matrices used for binary classification are identical [32]. Logistic regression is considered one of the most appropriate methods for predicting binary output [33].…”
Product testing is a critical step in tablet PC manufacturing processes. Purchases of testing equipment and on-site testing personnel increase overall manufacturing costs. In addition, to improve manufacturing capabilities, manufacturers must also produce products with higher quality and at a lower cost than their competitors if they are to attract consumers and gain a competitive edge in their industry. The Mahalanobis-Taguchi System (MTS) is a novel technique proposed by Genichi Taguchi for performing diagnoses and forecasting with multivariate data. The MTS can be used to select important factors and has been applied in numerous engineering fields to improve product and process quality. In the present study, the MTS, logistic regression, and a neural network were used to improve the tablet PC product testing process. The results indicated that the MTS attained 98% predictive power after insignificant test items were eliminated. The MTS performance was superior to those of the conventional logistic regression and neural network, which attained 93.3% and 94.7% predictive power, respectively. After the testing process was improved using the MTS, the number of test items in the tablet PC product testing process was reduced from 56 to 14. This facilitated the development of more stable test site configurations and effectively reduced the testing time, number of testers required, and equipment costs.
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