Physical Sciences and Mathematics Commons^™

Adaptive Credit Scoring With Analytic Hierarchy Process, Kwang Yong Koh, Murphy Choy, Michelle L. F. Cheong

Research Collection School Of Computing and Information Systems

Credit risk assessment for consumers has been a cornerstone of risk management in financial institutions and constitutes a component of the three pillars of Basel II. Traditionally, the concept of 5 ‘C’s was widely adopted by financial institutions as the key basis for credit risk assessment for loan applications by prospective borrowers. With the evolution of the credit risk management practices, more quantitative methods such as credit scorecards have been developed, which is implemented through the use of logistic regression, decision trees and neural networks. However, such approaches proved to be inadequate with the validity and effectiveness of the approaches …