№ 5/2016

Fìnansi Ukr. 2016 (5): 97–

MARKET OF FINANCIAL SERVICES

MATVIICHUK Andrii , CHEKH Ilona

SELECTION OF SIGNIFICANT CHARACTERISTICS TO BUILD THE APPLICATION SCORING MODEL FOR CONSUMER LENDING

The article is devoted to solving problems of the analysis and selection of factors for a scoring model that have the strongest impact on determining the level of a borrower’s creditworthiness. The existing approaches to building the application scoring models for consumer lending are examined. The article reveals the essence and distinctive features of the process of selecting characteristics that are worth considering in constructing the model. In the consumer lending segment, credit risk factors depend on both the personal characteristics of a borrower and the loan parameters. The article proposes a new approach to the selection of significant characteristics, based on the statistical method of determining their predictive power. The essence of this approach consists in building artificial indicators that take into account multiple characteristics of potential borrowers simultaneously, which increases the adequacy of the economic and mathematical model. The application of this approach to real statistical data makes it possible to select for scoring models a number of both simple and composite indicators that will help conduct a most effective assessment of the risk of credit default by a borrower.

Keywords:application scoring, creditworthiness, predictive power, information value, characteristics of the borrower, composite indicator.

JEL: E50, E51, E52, G32.

MATVIICHUK A. . SELECTION OF SIGNIFICANT CHARACTERISTICS TO BUILD THE APPLICATION SCORING MODEL FOR CONSUMER LENDING / A. . MATVIICHUK , I. Chekh // Фінанси України. - 2016. - № 5. - C. 97-.

Article original in Ukrainian (pp. 97 - 111)

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