The purpose of this paper is to share United Finance Limited’s1
experience of overcoming pitfalls that impact the effectiveness
of Credit Risk Grading Model2. It was observed from a sample
of 1609 clients of year 2011 and 2012 that the model is not
estimating credit risk precisely. Further review of the model
reveals that the construction of attributes of the model gives
scopes to include biased information emphasizing the
significance of formatting attributes properly. Besides, the logic
of adopting multi-model approach in designing the model is
under scrutiny which deters presenting universal model. These
learning imply that to make the model effective in decision
making, continuous development is needed.
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