Investigation of the scoring model for bank borrowers

Анотація

In the paper we investigate scoring models as a tool for credit risk management, their importance, types, features and applications. We consider the history of scoring models and the development of the modern concepts of creditworthiness and scoring, examine scoring types and their features, methods (logistic regression, decision trees, linear programming, decision trees, and others), strengths and weaknesses of each considered method and stages of building scoring models; we stress the importance of scoring cards for building scoring models, indicate the main quantitative and qualitative features, their classification used for and describe the procedure of creating scoring cards. In the paper we consider the factors needed to be considered for more effective scoring model building process; we indicate the main formulas used to assess the creditworthiness of borrowers and improve the accuracy of scoring models, including Population Stability Index (PSI), R-Square Coefficient, Kolmogorov-Smirnov Coefficient, GINI Coefficient, and others; the practical application of scoring models in banks of Ukraine and their steps after applying scoring models are described on the example of a typical borrower.

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