Open Access. Powered by Scholars. Published by Universities.®
Physical Sciences and Mathematics Commons™
Open Access. Powered by Scholars. Published by Universities.®
Articles 1 - 1 of 1
Full-Text Articles in Physical Sciences and Mathematics
Assessment Of Model Development Techniques And Evaluation Methods For Binary Classification In The Credit Industry, Satish Nargundkar, Jennifer Priestley
Assessment Of Model Development Techniques And Evaluation Methods For Binary Classification In The Credit Industry, Satish Nargundkar, Jennifer Priestley
Jennifer L. Priestley
We examine and compare the most prevalent modeling techniques in the credit industry, Linear Discriminant Analysis, Logistic Analysis and the emerging technique of Neural Network modeling. K-S Tests and Classification Rates are typically used in the industry to measure the success in predictive classification. We examine those two methods and a third, ROC Curves, to determine if the method of evaluation has an influence on the perceived performance of the modeling technique. We found that each modeling technique has its own strengths, and a determination of the “best” depends upon the evaluation method utilized and the costs associated with misclassification.