1. modeFinance is an Italian company that provides credit rating reports and evaluations of companies' creditworthiness using its own rating methodology called MORE.
2. modeFinance aims to answer everyday questions about companies' real creditworthiness from customers, suppliers, partners, and banks.
3. modeFinance's products help customers monitor their financial portfolios and evaluate the credit risk of companies worldwide. modeFinance has been accepted into The MathWorks Connections Program to further develop its MORE credit rating product.
The document provides an overview of credit scoring and scorecard development. It discusses:
- The objectives of credit scoring in assessing credit risk and forecasting good/bad applicants.
- The types of clients that are categorized for scoring, including good, bad, indeterminate, insufficient, excluded, and rejected.
- The research objectives and challenges in building statistical models to assign risk scores and monitor model performance.
- The research methodology involving data partitioning, variable binning, scorecard modeling using logistic regression, and scorecard evaluation metrics like KS, Gini, and lift.
Credit risks are calculated based on the borrowers’ overall ability to repay. Our objective was to use optimization in order to create a tool that approves or rejects loans to borrowers. We also used optimization to establish how much interest rate/credit will be extended to borrowers who were approved for a loan.
The document describes developing a logistic regression model to predict credit risk. It outlines preprocessing steps like binning variables, handling missing data, and sampling training data. Three models are developed: Model 1 uses binned variables and imputed missing data, Model 2 is similar but bins missing data, and Model 3 uses original variables. Model 1 outputs the logit function and identifies key predictor variables as number of late payments, open accounts, and binned age, debt ratio, and credit utilization variables.
Predicting Delinquency-Give me some creditpragativbora
This document provides an analysis of credit data to predict financial distress. It explores 150,000 consumer records using variables like income, age, credit lines, loans, and payment history to develop classification models. Logistic regression and neural networks are implemented and evaluated. Data preprocessing addressed issues like missing values. The best model can help banks better assess loan risk and improve profitability by tailoring interest rates. Overall, traditional and advanced techniques are used to create a superior model for predicting customer defaults.
1. The document outlines the steps in building a credit risk model, including defining the objective, applying exclusions, determining the observation and performance windows, defining "bad" accounts, performing segmentation, selecting variables, building the regression model, and validating and recalibrating the model.
2. Segmentation involves dividing the population into subgroups for separate modeling in order to better separate "good" and "bad" accounts. Common segmentation variables include product type, account tenure, credit file thickness, and portfolio type.
3. Determining the "bad" definition and performance window involves analysis of account roll rates and waterfalls to identify what constitutes a "bad"
This document discusses credit risk model building in four main steps:
1) Studying historical customer data to identify factors that impact the likelihood of default or charge-off.
2) Identifying the 20 most impacting factors out of hundreds of potential variables.
3) Using logistic regression to quantify the exact impact of each factor and develop a predictive model.
4) Applying the model to new customers to predict their probability of default based on their characteristics and factor weights. Other examples discussed include marketing response modeling and fraud detection modeling.
Default Probability Prediction using Artificial Neural Networks in R ProgrammingVineet Ojha
The objective of the project is to analyze the ability of the Artificial Neural Network Model
developed to forecast the credit risk profile of retails banking loan consumers and credit card
customers.
From a theoretical point of view, this project introduces a literature review on the detailed
working and the application of Artificial Neural Networks for credit risk management.
Practically, the aim of this project is presenting a model for estimating the Probability of Default
using Artificial Neural Network to accrue benefit non-linear models.
The document provides an overview of credit scoring and scorecard development. It discusses:
- The objectives of credit scoring in assessing credit risk and forecasting good/bad applicants.
- The types of clients that are categorized for scoring, including good, bad, indeterminate, insufficient, excluded, and rejected.
- The research objectives and challenges in building statistical models to assign risk scores and monitor model performance.
- The research methodology involving data partitioning, variable binning, scorecard modeling using logistic regression, and scorecard evaluation metrics like KS, Gini, and lift.
Credit risks are calculated based on the borrowers’ overall ability to repay. Our objective was to use optimization in order to create a tool that approves or rejects loans to borrowers. We also used optimization to establish how much interest rate/credit will be extended to borrowers who were approved for a loan.
The document describes developing a logistic regression model to predict credit risk. It outlines preprocessing steps like binning variables, handling missing data, and sampling training data. Three models are developed: Model 1 uses binned variables and imputed missing data, Model 2 is similar but bins missing data, and Model 3 uses original variables. Model 1 outputs the logit function and identifies key predictor variables as number of late payments, open accounts, and binned age, debt ratio, and credit utilization variables.
Predicting Delinquency-Give me some creditpragativbora
This document provides an analysis of credit data to predict financial distress. It explores 150,000 consumer records using variables like income, age, credit lines, loans, and payment history to develop classification models. Logistic regression and neural networks are implemented and evaluated. Data preprocessing addressed issues like missing values. The best model can help banks better assess loan risk and improve profitability by tailoring interest rates. Overall, traditional and advanced techniques are used to create a superior model for predicting customer defaults.
1. The document outlines the steps in building a credit risk model, including defining the objective, applying exclusions, determining the observation and performance windows, defining "bad" accounts, performing segmentation, selecting variables, building the regression model, and validating and recalibrating the model.
2. Segmentation involves dividing the population into subgroups for separate modeling in order to better separate "good" and "bad" accounts. Common segmentation variables include product type, account tenure, credit file thickness, and portfolio type.
3. Determining the "bad" definition and performance window involves analysis of account roll rates and waterfalls to identify what constitutes a "bad"
This document discusses credit risk model building in four main steps:
1) Studying historical customer data to identify factors that impact the likelihood of default or charge-off.
2) Identifying the 20 most impacting factors out of hundreds of potential variables.
3) Using logistic regression to quantify the exact impact of each factor and develop a predictive model.
4) Applying the model to new customers to predict their probability of default based on their characteristics and factor weights. Other examples discussed include marketing response modeling and fraud detection modeling.
Default Probability Prediction using Artificial Neural Networks in R ProgrammingVineet Ojha
The objective of the project is to analyze the ability of the Artificial Neural Network Model
developed to forecast the credit risk profile of retails banking loan consumers and credit card
customers.
From a theoretical point of view, this project introduces a literature review on the detailed
working and the application of Artificial Neural Networks for credit risk management.
Practically, the aim of this project is presenting a model for estimating the Probability of Default
using Artificial Neural Network to accrue benefit non-linear models.
Loan Default Prediction with Machine LearningAlibaba Cloud
See webinar recording of this presentation at: https://resource.alibabacloud.com/webinar/detail.htm?webinarId=50
This webinar is designed to help users understand the end-to-end data science processes of using a propensity model on Alibaba Cloud’s Machine Learning Platform for AI; from defining the business problem, exploratory data analysis, data processing, model training to testing and deployment. You get an end-to-end case study (including a live demo) on how to use Alibaba Cloud products to predict the propensity of loan defaults.
Learn more about Machine Learning Platform for AI:
https://www.alibabacloud.com/product/machine-learning
Default Prediction & Analysis on Lending Club Loan DataDeep Borkar
This document analyzes lending club loan data to predict loan defaults and calculate default probabilities using models like gradient boosting, neural networks, and logistic regression. The goal is to make informed decisions about future loans to assess profitability. Various machine learning models are trained and tested on the data, with gradient boosting achieving the best results. The loans are then segmented by default risk to analyze the net present value of the portfolio under various hypothetical default rates.
The document discusses credit scoring methods and model development. It provides an overview of different types of scoring models, including application and behavioral scoring. It also describes the model building process, including variable selection, statistical techniques like logistic regression, model validation, and performance measures. Monitoring of models after implementation is discussed through examples like approval rate reports and scorecard performance analysis. Future directions for scoring are mentioned, like adaptive control and profitability modeling.
Logistic regression is a statistical model used to predict binary outcomes like disease presence/absence from several explanatory variables. It is similar to linear regression but for binary rather than continuous outcomes. The document provides an example analysis using logistic regression to predict risk of HHV8 infection from sexual behaviors and infections like HIV. The analysis found HIV and HSV2 history were associated with higher odds of HHV8 after adjusting for other variables, while gonorrhea history was not a significant independent predictor.
What is Predictive Analytics?
Predictive Analytics is the stream of the advanced analytics which utilizes diverse techniques like data mining, predictive modelling, statistics, machine learning and artificial intelligence to analyse current data and predict future.
To Know more: https://goo.gl/zAcnCR
LOAN DEFAULT PREDICTION – A CASE STUDY
Content Covered in this video:
Business Problem & Benefits
The Risk - LOAN DEFAULT PREDICTION
Data Analysis Process
Data Processing
Predictive Analysis Process
Tools & Technology
Predictive modeling is a process used in predictive analytics to create statistical models that can forecast future outcomes based on historical data. Predictive modeling uses techniques from data mining, statistics, and machine learning to analyze current data to make predictions. The predictive modeling process involves collecting data, creating a model, testing and validating the model, and evaluating the model's performance. Predictive models are commonly used to predict customer behavior, risk levels, product performance, and more. Industries like retail, healthcare, finance, and telecommunications frequently use predictive modeling techniques.
In Machine Learning in Credit Risk Modeling, we provide an explanation of the main Machine Learning models used in James so that Efficiency does not come at the expense of Explainability.
(Contact Yvan De Munck for more info or to receive other and future updates on the subject @yvandemunck or yvan@james.finance)
Predictive Analytics enables organisations to forecast future events, analyse risks and opportunities, and automate decision making processes by analysing historic data.
The document discusses predictive analytics and forecasting. It defines predictive analytics as producing predictive scores for each customer or organizational element, while forecasting provides aggregate estimates such as total sales. Prediction involves classifying outcomes like customer retention, while forecasting understands trends and seasonality. Predictive modeling creates statistical models of future behavior by collecting and analyzing data to predict outcomes. Common predictive algorithms include logistic regression, decision trees, naive bayes, and clustering.
The credit risk management team consists of Sanika Dixit, Shweta Vaidya, Sneha Salian, and Snehal Datta. Their goal is to assess and mitigate credit portfolio risks to reduce financial losses from borrower default. The BI solution enables accurate risk assessment, loss reduction, and faster reporting by analyzing key performance indicators like profit, customer growth, and credit risk at the region, product, and branch level.
Default credit cards are an important issue that bring negative consequences to both sides, i.e, banks and customer. If a customer does not pay his obligations, banks loose money, the customer will lose credibility in future payments, collection calls start to be made and in last resort, the case may go into the court. In order to avoid all of that trouble, effective methods that are able to predict the default of credit cards are needed. Therefore, default credit card prediction is an important, challenging and useful task that should be addressed.
This presentation documents how the problem can be addressed, following the pipeline of a typical Patter Recognition application. The main task is to classify a set of samples representing the history of payments and bill statements of a given client plus some background information about the client according to its ability to pay or not (Default) the next monthly payment of its credit card.
This document discusses decision trees and their use in predictive modeling. It provides an example of using a decision tree to predict credit ratings. The decision tree splits the data into nodes based on variables like checking accounts, savings accounts, and duration. Each node shows the percentage of good and bad credit ratings, with deeper nodes having higher percentages. Decision trees allow targeting subsets of a population that have higher response rates to improve outcomes.
Loan default prediction with machine language Aayush Kumar
Deafult-Loan-Prediction-Project-Using-Random-Forest-and-Decision-Tree
Deafult Loan Prediction Project Using Random Forest and Decision Tree, In This Project we use loan data from Leanding Club Random Forest Project - Deafult Loan Prediction For this project we will be exploring publicly available data from LendingClub.com. Lending Club connects people who need money (borrowers) with people who have money (investors). Hopefully, as an investor you would want to invest in people who showed a profile of having a high probability of paying you back. We will try to create a model that will help predict this.
Gather the required information from the data and predict future outcomes and trends. Use content-ready Predictive Analysis PowerPoint Presentation Slides to forecast future probabilities. Majorly applied in the business field, predictive analysis PPT templates will help you evaluate current data and historical facts to understand customers, products, services, partners, and to identify potential risks and opportunities for an organization. This deck comprises of templates such as research methodology, consumer insights consumption, need for consumer insights, key stats, data collection and processing, consumer insight capabilities, These templates are completely customizable. You can edit the templates as per your need. Change color, text, icon and font size as per your requirement. Add or remove the content, if needed. Get access to the predictive analysis PowerPoint presentation slideshow to predict future outcomes for various business topics such as customer relationship management, health care, collection analytics, fraud detection, risk management, direct marketing, industry applications, etc. Get access to the professionally designed ready-made predictive analysis PowerPoint presentation slides for your business to interpret big data for your benefit. Maintain your demeanour with our Predictive Analysis Powerpoint Presentation Slides. They will help you keep your cool. https://bit.ly/2WktT53
Predictive Model for Loan Approval Process using SAS 9.3_M1Akanksha Jain
This is a Predictive Model which uses Logistic Regression to statistically help make better loan approval decisions in future for a German Bank. It uses an historical credit data set with 1000 data points and 20 variables.
Tool used:
SAS 9.3_M1
Steps Involved are:
- Data Quality check using Correlations and VIF Tests
- Analysis of different Variable Selection Methods such as Forward, Backward and Stepwise
- Variable Selection on the basis of Parameter Estimates and Odds Ratio
- Outlier Analysis to identify the outliers and improve the model
- Final Model Selection Decision based on ROC curve, Percent Concordant, PROC Rank and Hosmer Lemeshow Test
This document discusses anomaly and fraud detection using machine learning. It outlines different applications of anomaly detection such as cybersecurity and fraud detection. It compares supervised versus unsupervised learning approaches for financial sector applications. Specific algorithms discussed for unsupervised anomaly detection include isolation forest, DBSCAN, HDBSCAN, local outlier factor, and Gaussian mixture models.
This document provides an overview of logistic regression, including when and why it is used, the theory behind it, and how to assess logistic regression models. Logistic regression predicts the probability of categorical outcomes given categorical or continuous predictor variables. It relaxes the normality and linearity assumptions of linear regression. The relationship between predictors and outcomes is modeled using an S-shaped logistic function. Model fit, predictors, and interpretations of coefficients are discussed.
This Logistic Regression Presentation will help you understand how a Logistic Regression algorithm works in Machine Learning. In this tutorial video, you will learn what is Supervised Learning, what is Classification problem and some associated algorithms, what is Logistic Regression, how it works with simple examples, the maths behind Logistic Regression, how it is different from Linear Regression and Logistic Regression applications. At the end, you will also see an interesting demo in Python on how to predict the number present in an image using Logistic Regression.
Below topics are covered in this Machine Learning Algorithms Presentation:
1. What is supervised learning?
2. What is classification? what are some of its solutions?
3. What is logistic regression?
4. Comparing linear and logistic regression
5. Logistic regression applications
6. Use case - Predicting the number in an image
What is Machine Learning: Machine Learning is an application of Artificial Intelligence (AI) that provides systems the ability to automatically learn and improve from experience without being explicitly programmed.
- - - - - - - -
About Simplilearn Machine Learning course:
A form of artificial intelligence, Machine Learning is revolutionizing the world of computing as well as all people’s digital interactions. Machine Learning powers such innovative automated technologies as recommendation engines, facial recognition, fraud protection and even self-driving cars.This Machine Learning course prepares engineers, data scientists and other professionals with knowledge and hands-on skills required for certification and job competency in Machine Learning.
- - - - - - -
Why learn Machine Learning?
Machine Learning is taking over the world- and with that, there is a growing need among companies for professionals to know the ins and outs of Machine Learning
The Machine Learning market size is expected to grow from USD 1.03 Billion in 2016 to USD 8.81 Billion by 2022, at a Compound Annual Growth Rate (CAGR) of 44.1% during the forecast period.
- - - - - -
What skills will you learn from this Machine Learning course?
By the end of this Machine Learning course, you will be able to:
1. Master the concepts of supervised, unsupervised and reinforcement learning concepts and modeling.
2. Gain practical mastery over principles, algorithms, and applications of Machine Learning through a hands-on approach which includes working on 28 projects and one capstone project.
3. Acquire thorough knowledge of the mathematical and heuristic aspects of Machine Learning.
4. Understand the concepts and operation of support vector machines, kernel SVM, naive bayes, decision tree classifier, random forest classifier, logistic regression, K-nearest neighbors, K-means clustering and more.
5. Be able to model a wide variety of robust Machine Learning algorithms including deep learning, clustering, and recommendation systems
- - - - - - -
Credit risk refers to the risk of a counterparty defaulting on their obligations. It is defined as the possibility that a borrower may fail to meet their obligations in accordance with the agreed terms. There are several components of credit risk, including the amount of the loan, quality of the loan, default risk, exposure risk, and recovery risk. Credit risk management is important for banks due to new financial transactions, decreasing government support, and regulatory capital requirements. Banks traditionally evaluated credit risk using the 5 C's of credit analysis and now also utilize internal credit rating systems.
Applications of Data Science in Banking and Financial sector.pptxkarnika21
The document summarizes key aspects of the banking domain, including the importance of banking in finance, services provided by banks, risks faced by banks, and applications of data science in solving banking problems. It provides an example of how JP Morgan uses data analytics for fraud detection, predictive analysis, and providing customized experiences. It also discusses challenges in testing banking applications and concludes that data science can help banks improve risk management, customer service, and efficiency.
IRJET- Prediction of Credit Risks in Lending Bank LoansIRJET Journal
This document discusses machine learning models for predicting credit risk in bank loan applications. It begins with an introduction to credit risk assessment and types of loans. Then, it describes how machine learning can be used to more accurately evaluate borrowers' ability to repay loans based on important variables like borrower characteristics, loan details, and repayment status. The document proposes using artificial neural network and support vector machine models to classify borrowers as good or bad credit risks based on these variables. It evaluates the accuracy of support vector machines and boosted decision tree models for the task of credit risk prediction.
Loan Default Prediction with Machine LearningAlibaba Cloud
See webinar recording of this presentation at: https://resource.alibabacloud.com/webinar/detail.htm?webinarId=50
This webinar is designed to help users understand the end-to-end data science processes of using a propensity model on Alibaba Cloud’s Machine Learning Platform for AI; from defining the business problem, exploratory data analysis, data processing, model training to testing and deployment. You get an end-to-end case study (including a live demo) on how to use Alibaba Cloud products to predict the propensity of loan defaults.
Learn more about Machine Learning Platform for AI:
https://www.alibabacloud.com/product/machine-learning
Default Prediction & Analysis on Lending Club Loan DataDeep Borkar
This document analyzes lending club loan data to predict loan defaults and calculate default probabilities using models like gradient boosting, neural networks, and logistic regression. The goal is to make informed decisions about future loans to assess profitability. Various machine learning models are trained and tested on the data, with gradient boosting achieving the best results. The loans are then segmented by default risk to analyze the net present value of the portfolio under various hypothetical default rates.
The document discusses credit scoring methods and model development. It provides an overview of different types of scoring models, including application and behavioral scoring. It also describes the model building process, including variable selection, statistical techniques like logistic regression, model validation, and performance measures. Monitoring of models after implementation is discussed through examples like approval rate reports and scorecard performance analysis. Future directions for scoring are mentioned, like adaptive control and profitability modeling.
Logistic regression is a statistical model used to predict binary outcomes like disease presence/absence from several explanatory variables. It is similar to linear regression but for binary rather than continuous outcomes. The document provides an example analysis using logistic regression to predict risk of HHV8 infection from sexual behaviors and infections like HIV. The analysis found HIV and HSV2 history were associated with higher odds of HHV8 after adjusting for other variables, while gonorrhea history was not a significant independent predictor.
What is Predictive Analytics?
Predictive Analytics is the stream of the advanced analytics which utilizes diverse techniques like data mining, predictive modelling, statistics, machine learning and artificial intelligence to analyse current data and predict future.
To Know more: https://goo.gl/zAcnCR
LOAN DEFAULT PREDICTION – A CASE STUDY
Content Covered in this video:
Business Problem & Benefits
The Risk - LOAN DEFAULT PREDICTION
Data Analysis Process
Data Processing
Predictive Analysis Process
Tools & Technology
Predictive modeling is a process used in predictive analytics to create statistical models that can forecast future outcomes based on historical data. Predictive modeling uses techniques from data mining, statistics, and machine learning to analyze current data to make predictions. The predictive modeling process involves collecting data, creating a model, testing and validating the model, and evaluating the model's performance. Predictive models are commonly used to predict customer behavior, risk levels, product performance, and more. Industries like retail, healthcare, finance, and telecommunications frequently use predictive modeling techniques.
In Machine Learning in Credit Risk Modeling, we provide an explanation of the main Machine Learning models used in James so that Efficiency does not come at the expense of Explainability.
(Contact Yvan De Munck for more info or to receive other and future updates on the subject @yvandemunck or yvan@james.finance)
Predictive Analytics enables organisations to forecast future events, analyse risks and opportunities, and automate decision making processes by analysing historic data.
The document discusses predictive analytics and forecasting. It defines predictive analytics as producing predictive scores for each customer or organizational element, while forecasting provides aggregate estimates such as total sales. Prediction involves classifying outcomes like customer retention, while forecasting understands trends and seasonality. Predictive modeling creates statistical models of future behavior by collecting and analyzing data to predict outcomes. Common predictive algorithms include logistic regression, decision trees, naive bayes, and clustering.
The credit risk management team consists of Sanika Dixit, Shweta Vaidya, Sneha Salian, and Snehal Datta. Their goal is to assess and mitigate credit portfolio risks to reduce financial losses from borrower default. The BI solution enables accurate risk assessment, loss reduction, and faster reporting by analyzing key performance indicators like profit, customer growth, and credit risk at the region, product, and branch level.
Default credit cards are an important issue that bring negative consequences to both sides, i.e, banks and customer. If a customer does not pay his obligations, banks loose money, the customer will lose credibility in future payments, collection calls start to be made and in last resort, the case may go into the court. In order to avoid all of that trouble, effective methods that are able to predict the default of credit cards are needed. Therefore, default credit card prediction is an important, challenging and useful task that should be addressed.
This presentation documents how the problem can be addressed, following the pipeline of a typical Patter Recognition application. The main task is to classify a set of samples representing the history of payments and bill statements of a given client plus some background information about the client according to its ability to pay or not (Default) the next monthly payment of its credit card.
This document discusses decision trees and their use in predictive modeling. It provides an example of using a decision tree to predict credit ratings. The decision tree splits the data into nodes based on variables like checking accounts, savings accounts, and duration. Each node shows the percentage of good and bad credit ratings, with deeper nodes having higher percentages. Decision trees allow targeting subsets of a population that have higher response rates to improve outcomes.
Loan default prediction with machine language Aayush Kumar
Deafult-Loan-Prediction-Project-Using-Random-Forest-and-Decision-Tree
Deafult Loan Prediction Project Using Random Forest and Decision Tree, In This Project we use loan data from Leanding Club Random Forest Project - Deafult Loan Prediction For this project we will be exploring publicly available data from LendingClub.com. Lending Club connects people who need money (borrowers) with people who have money (investors). Hopefully, as an investor you would want to invest in people who showed a profile of having a high probability of paying you back. We will try to create a model that will help predict this.
Gather the required information from the data and predict future outcomes and trends. Use content-ready Predictive Analysis PowerPoint Presentation Slides to forecast future probabilities. Majorly applied in the business field, predictive analysis PPT templates will help you evaluate current data and historical facts to understand customers, products, services, partners, and to identify potential risks and opportunities for an organization. This deck comprises of templates such as research methodology, consumer insights consumption, need for consumer insights, key stats, data collection and processing, consumer insight capabilities, These templates are completely customizable. You can edit the templates as per your need. Change color, text, icon and font size as per your requirement. Add or remove the content, if needed. Get access to the predictive analysis PowerPoint presentation slideshow to predict future outcomes for various business topics such as customer relationship management, health care, collection analytics, fraud detection, risk management, direct marketing, industry applications, etc. Get access to the professionally designed ready-made predictive analysis PowerPoint presentation slides for your business to interpret big data for your benefit. Maintain your demeanour with our Predictive Analysis Powerpoint Presentation Slides. They will help you keep your cool. https://bit.ly/2WktT53
Predictive Model for Loan Approval Process using SAS 9.3_M1Akanksha Jain
This is a Predictive Model which uses Logistic Regression to statistically help make better loan approval decisions in future for a German Bank. It uses an historical credit data set with 1000 data points and 20 variables.
Tool used:
SAS 9.3_M1
Steps Involved are:
- Data Quality check using Correlations and VIF Tests
- Analysis of different Variable Selection Methods such as Forward, Backward and Stepwise
- Variable Selection on the basis of Parameter Estimates and Odds Ratio
- Outlier Analysis to identify the outliers and improve the model
- Final Model Selection Decision based on ROC curve, Percent Concordant, PROC Rank and Hosmer Lemeshow Test
This document discusses anomaly and fraud detection using machine learning. It outlines different applications of anomaly detection such as cybersecurity and fraud detection. It compares supervised versus unsupervised learning approaches for financial sector applications. Specific algorithms discussed for unsupervised anomaly detection include isolation forest, DBSCAN, HDBSCAN, local outlier factor, and Gaussian mixture models.
This document provides an overview of logistic regression, including when and why it is used, the theory behind it, and how to assess logistic regression models. Logistic regression predicts the probability of categorical outcomes given categorical or continuous predictor variables. It relaxes the normality and linearity assumptions of linear regression. The relationship between predictors and outcomes is modeled using an S-shaped logistic function. Model fit, predictors, and interpretations of coefficients are discussed.
This Logistic Regression Presentation will help you understand how a Logistic Regression algorithm works in Machine Learning. In this tutorial video, you will learn what is Supervised Learning, what is Classification problem and some associated algorithms, what is Logistic Regression, how it works with simple examples, the maths behind Logistic Regression, how it is different from Linear Regression and Logistic Regression applications. At the end, you will also see an interesting demo in Python on how to predict the number present in an image using Logistic Regression.
Below topics are covered in this Machine Learning Algorithms Presentation:
1. What is supervised learning?
2. What is classification? what are some of its solutions?
3. What is logistic regression?
4. Comparing linear and logistic regression
5. Logistic regression applications
6. Use case - Predicting the number in an image
What is Machine Learning: Machine Learning is an application of Artificial Intelligence (AI) that provides systems the ability to automatically learn and improve from experience without being explicitly programmed.
- - - - - - - -
About Simplilearn Machine Learning course:
A form of artificial intelligence, Machine Learning is revolutionizing the world of computing as well as all people’s digital interactions. Machine Learning powers such innovative automated technologies as recommendation engines, facial recognition, fraud protection and even self-driving cars.This Machine Learning course prepares engineers, data scientists and other professionals with knowledge and hands-on skills required for certification and job competency in Machine Learning.
- - - - - - -
Why learn Machine Learning?
Machine Learning is taking over the world- and with that, there is a growing need among companies for professionals to know the ins and outs of Machine Learning
The Machine Learning market size is expected to grow from USD 1.03 Billion in 2016 to USD 8.81 Billion by 2022, at a Compound Annual Growth Rate (CAGR) of 44.1% during the forecast period.
- - - - - -
What skills will you learn from this Machine Learning course?
By the end of this Machine Learning course, you will be able to:
1. Master the concepts of supervised, unsupervised and reinforcement learning concepts and modeling.
2. Gain practical mastery over principles, algorithms, and applications of Machine Learning through a hands-on approach which includes working on 28 projects and one capstone project.
3. Acquire thorough knowledge of the mathematical and heuristic aspects of Machine Learning.
4. Understand the concepts and operation of support vector machines, kernel SVM, naive bayes, decision tree classifier, random forest classifier, logistic regression, K-nearest neighbors, K-means clustering and more.
5. Be able to model a wide variety of robust Machine Learning algorithms including deep learning, clustering, and recommendation systems
- - - - - - -
Credit risk refers to the risk of a counterparty defaulting on their obligations. It is defined as the possibility that a borrower may fail to meet their obligations in accordance with the agreed terms. There are several components of credit risk, including the amount of the loan, quality of the loan, default risk, exposure risk, and recovery risk. Credit risk management is important for banks due to new financial transactions, decreasing government support, and regulatory capital requirements. Banks traditionally evaluated credit risk using the 5 C's of credit analysis and now also utilize internal credit rating systems.
Applications of Data Science in Banking and Financial sector.pptxkarnika21
The document summarizes key aspects of the banking domain, including the importance of banking in finance, services provided by banks, risks faced by banks, and applications of data science in solving banking problems. It provides an example of how JP Morgan uses data analytics for fraud detection, predictive analysis, and providing customized experiences. It also discusses challenges in testing banking applications and concludes that data science can help banks improve risk management, customer service, and efficiency.
IRJET- Prediction of Credit Risks in Lending Bank LoansIRJET Journal
This document discusses machine learning models for predicting credit risk in bank loan applications. It begins with an introduction to credit risk assessment and types of loans. Then, it describes how machine learning can be used to more accurately evaluate borrowers' ability to repay loans based on important variables like borrower characteristics, loan details, and repayment status. The document proposes using artificial neural network and support vector machine models to classify borrowers as good or bad credit risks based on these variables. It evaluates the accuracy of support vector machines and boosted decision tree models for the task of credit risk prediction.
Presentation to SEC Staff: Open Source Alternatives to Credit RatingsMarc Joffe
This is a slide presentation I gave to members of the Office of Credit Ratings in January 2013. It outlines a proposal I will be making as a participant in the May 2013 SEC Credit Ratings Roundtable.
Data is nothing if not converted to actionable insights and used to make smart business decisions. With our team of scientists
and AI developers, innovative bespoke technology solutions, and industry experience, Fractal Labs can simplify your raw data,
enabling you to unlock insights for strategic development within your organisation. We turn data into measurable and scalable
financial and risk tools. We enable your business to run faster, streamlined and overcome regulatory, financial and fraud
challenges.
Tutorial on Advances in Bias-aware Recommendation on the Web @ WSDM 2021Mirko Marras
This document provides an overview of an online conference presentation on advances in bias-aware recommendation. The presentation is divided into three sessions:
Session I covers the foundations of recommendation systems and data/algorithmic bias. It includes an introduction to recommendation principles and hands-on with recommender systems.
Session II focuses on techniques for mitigating bias, with slides on common mitigation approaches and another hands-on exercise on popularity bias.
Session III examines unfairness mitigation strategies with slides on unfairness measures and mitigation. It concludes with a hands-on activity related to provider unfairness.
The presentation aims to raise awareness of bias issues in recommendations, showcase bias mitigation techniques, and identify new directions
This document summarizes the agenda for Day 4 of the Fintech Bootcamp hosted by QuantUniversity. The agenda includes a discussion of the history and evolution of payment automation from the 1950s to present day, an overview of major trends and solutions in innovative payments like mobile and merchant payments, and the impact of payment revolution on traditional financial institutions. The document concludes with next steps which include a post-event questionnaire and certification process for attendees.
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AI MODELS USAGE IN FINTECH PRODUCTS: PM APPROACH & BEST PRACTICES by Kasthuri...ISPMAIndia
AI/ML models are being extensively used in the financial industry for purposes ranging from Customer Sourcing, Credit Scoring, Campaign Management, Fraud Risk Management, Anti-Money Laundering, Rewards Management, Risk Management and Operations. Usage of ML models have made it possible to do tasks which otherwise would have been very cumbersome or humanly impossible. However, there is a flip slide for the usage of ML models as well. For example, Machine Learning based models could suffer from serious flaws such as bias, and explainability, if the models are not constructed, used, and governed properly.
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AI Models: Usage in Fintech Products
Key Functional & Technical Challenges for a Product Manager
Key challenges of deploying models at scale: Indian context
Key Regulatory Concerns: Bias and Explainability of AI Models
Product Management across AI Model Lifecycle: Development |Deployment |Usage
3 Pillars for AI Models Product Management: Model Governance| Model Validation | Challenger Models
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The main target of this project is that it enables the telemarketing team to prioritize targeting for term loan marketing program by adopting a data-driven approach in Machine learning.
BANK LOAN PREDICTION USING MACHINE LEARNINGIRJET Journal
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Delopment and testing of a credit scoring model
1. Seminario
MATLAB per il Computational Finance
Milano, March 22nd 2011
Implementazione e test di un
modello di credit scoring
Mattia Ciprian, PhD
CEO @ modeFinance
2. • modeFinance is one Italian company active in financial consulting and creditworthiness
research; thanks to its own rating methodology, MORE, modeFinance provides credit rating
reports on international markets with companies’ business details, creditworthiness
evaluations, credit limit values, financial strengths & weaknesses analysis.
Mission
• Every day millions of people around the world are wondering what is the real creditworthiness
of the companies with which they are in business. Every day, these questions remain
unanswered. modeFinance every day aims to answer these questions in a simple, complete
and immediate way.
Products
• modeFinance is specialized in the analysis and evaluation of credit risk assessed to every
company operating in the world and it supplies different products for helping the customer in
the financial monitoring of their portfolios (dealers, suppliers, clients, partners, vendors,
competitors, etc)
modeFinance and Mathworks
• modeFinance has been accepted into The MathWorks Connections Program with its product,
MORE (Multi Objective Rating Evaluation).
www.modefinance.com
3/22/2011 2
info@modefinance.com
3. CREDIT REPORT STATISTICAL ANALYSIS MARKET SEARCH INTERNAL CREDIT RISK
The companies who would Public institutions The companies who PLATFORM
like to monitor: search the best suppliers, The companies and the
customers, suppliers and customers, partnerships. banks who want to use
competitors Research organizations internal data for the credit
risk assessment
Banks
Banks, financial consulting Associations
companies
Insurance companies
www.modefinance.com
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info@modefinance.com
4. Delopment and testing of a credit
scoring model
www.modefinance.com
3/22/2011 4
info@modefinance.com
5. • The term credit scoring refers to quantitative methods for evaluating the credit
quality of companies. Credit scoring is a quantitative exercise that is refreshingly
productive. A good scoring system can save lenders money and time, and can be a
first-order competitive advantage.
(Source: Falkenstein)
• The credit score is the first step for a rating assessment.
Good credit score = good rating
Bad credit score = bad rating
www.modefinance.com
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info@modefinance.com
6. 1. Z-Score Model: the pioneer predictive tool
1. Dataset selection
2. Ratio definition
3. Credit scoring model selection
4. Discriminant analysis (in sample – out of sample)
2. Credit scoring models
3. Model development:
1. Choosing inputs;
2. Transforming inputs;
3. Combining transformed inputs;
4. PD evaluation
4. Validating techniques
5. Conclusions
www.modefinance.com
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info@modefinance.com
15. It is possible to define thousands of ratios; in order to avoid redundancy, a first
simplification can be done by eliminating highly correlated variables.
50
45
c=corrcoef(database);
figure; pcolor (c); figure(gcf) 40
35
30
By their nature, most ratios are 25
correlated each other. The objective 20
should not be selecting completely 15
uncorrelated factors 10
5
5 10 15 20 25 30 35 40 45 50
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info@modefinance.com
16. • The selection of the best set of ratios is the first step in the
development of a credit scoring model. The set should change
according to the sector in which the companies are active.
The selection include both statistical approaches and
analytical reviews.
• Statistical selection tools suggested:
– Distribution Analysis;
– F-test and t-Student;
– Default Frequencies;
– CAP plots;
– Etc.
• We’ll apply these tools in the following slides to 2 ratios:
– CAP = (Shareholders Founds)/(Total Assets);
– STK = (Stocks)/(Total Assets);
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info@modefinance.com
18. • Default Frequency
– The x-axis shows the percentile in which a particular ratio value lies and the y-
axis shows the default frequency that is observed for firms with ratios in that
percentile (Moody’s def).
– The relation between a financial statement ratio and default is generally
monotonic and “non-linear”
CAP STK
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info@modefinance.com
19. • CAP Plot (Gini Index)
– The primary performance measure used by academics was measuring the percentage of
misclassifications. This was calculated based on the percentage of defaulting firms that
were accepted, and the percentage of non-defaulting firms that were rejected (Type I
and Type II errors). Essentially, power curves extend this analysis by plotting the
cumulative percentage of defaults excluded at each possible cut-off point for a given
model (Source: Moody’s)
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info@modefinance.com
20. CAP STK
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info@modefinance.com
21. 1. Z-Score Model: the pioneer predictive tool
1. Dataset selection
2. Ratio definition
3. Credit scoring model selection
4. Discriminant analysis (in sample – out of sample)
2. Credit scoring models
3. Model development:
1. Choosing inputs;
2. Transforming inputs;
3. Combining transformed inputs;
4. PD evaluation
4. Validating techniques
5. Conclusions
www.modefinance.com
3/22/2011 21
info@modefinance.com
22. • Transformation of this sort are essential because financial ratios are highly
skewed and fat-tailed, which causes a few observations to overly influence
the output if not transformed. Transformation methods include:
– Replacing the ratio with its percentile;
– Turning the ratio into a standard Gaussian variable;
– Applying a variety of sigmoidal functions;
– Using a nonparametric univariate default estimate generated by each variable
Source: Eric Falkenstein studies
z = (x-mean(x))./std(x);
s = 1 ./ (1 + exp(-z));
plot(x,s,'o')
CAP STK
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info@modefinance.com
23. 1. Z-Score Model: the pioneer predictive tool
1. Dataset selection
2. Ratio definition
3. Credit scoring model selection
4. Discriminant analysis (in sample – out of sample)
2. Credit scoring models
3. Model development:
1. Choosing inputs;
2. Transforming inputs;
3. Combining transformed inputs;
4. PD evaluation
4. Validating techniques
5. Conclusions
www.modefinance.com
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info@modefinance.com
24. • If you follow the previous suggestions (reliable data and info, default info,
representative DB, ratio selection, ratio transformation, etc.), doesn’t matter which
kind of scoring technique you select.
• You can choose among:
– Discriminant analysis
– Logit and Probit
– Kernel density estimators (e.g. SVM)
– Neural Networks
– Genetic Algorithms
– Etc.
Maximum Likelihood – Logit function
In the training sample T, L is probability
(likelihood) of the observed situation (if the
π(i) is the probability of observations are independent)
observation i being in set B
or in set G
The problem is that the range of π(i) is [0,1] whereas the
predictors can take any real value. Therefore the right-
hand side is transformed using a monotonous function.
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info@modefinance.com
25. 1. Z-Score Model: the pioneer predictive tool
1. Dataset selection
2. Ratio definition
3. Credit scoring model selection
4. Discriminant analysis (in sample – out of sample)
2. Credit scoring models
3. Model development:
1. Choosing inputs;
2. Transforming inputs;
3. Combining transformed inputs;
4. PD evaluation
4. Validating techniques
5. Conclusions
www.modefinance.com
3/22/2011 25
info@modefinance.com
26. EBITDA interest coverage ratio
ROE Return on equity
ROS Return on sales
Total Shareholders Founds / Total Assets
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info@modefinance.com
27. 1. Z-Score Model: the pioneer predictive tool
1. Dataset selection
2. Ratio definition
3. Credit scoring model selection
4. Discriminant analysis (in sample – out of sample)
2. Credit scoring models
3. Model development:
1. Choosing inputs;
2. Transforming inputs;
3. Combining transformed inputs;
4. PD evaluation
4. Validating techniques
5. Conclusions
www.modefinance.com
3/22/2011 27
info@modefinance.com