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An Improved Credit Scoring Function for the St. Paul Bank for Cooperatives

Author

Listed:
  • Fischer, Martin L.
  • Moore, Karen

Abstract

A new credit scoring function for classifying Bank of Cooperatives loans, pricing loans based on credit risk, screening loan applications, and diagnosing credit weaknesses was estimated using stepwise logistic regression analysis. Two versions were estimated, dichotomous and polychotomous. The dichotomous model is judged superior for the above uses. The model was tested for validity for different types of cooperatives. In a combined estimating and test sample of 708 cooperatives, the model correctly classifies 92 percent of cooperatives in a 2-class system and 70 percent in a 4-class system.

Suggested Citation

  • Fischer, Martin L. & Moore, Karen, 1986. "An Improved Credit Scoring Function for the St. Paul Bank for Cooperatives," Journal of Agricultural Cooperation, National Council of Farmer Cooperatives, vol. 1, pages 1-11.
    • Handle: RePEc:ags:joagco:46269
    DOI: 10.22004/ag.econ.46269
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    Cited by:

    1. Kaylen, Michael S. & Devino, Gary T. & Procter, Michael H., 1988. "Optimal Use Of Qualitative Models: An Application To Country Grain Elevator Bankruptcies," Southern Journal of Agricultural Economics, Southern Agricultural Economics Association, vol. 20(2), pages 1-7, December.
    2. Babetskaya, Lyubov, 2001. "Enhancing The Performance Of Risk-Rating Models At Community Banks," 2001 Annual meeting, August 5-8, Chicago, IL 20690, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    3. Rambaldi, Alicia N. & Zapata, Hector O. & Christy, Ralph D., 1992. "Selecting The "Best" Prediction Model: An Application To Agricultural Cooperatives," Southern Journal of Agricultural Economics, Southern Agricultural Economics Association, vol. 24(1), pages 1-7, July.
    4. Barry, Peter J. & Ellinger, Paul N., 1989. "Credit Scoring, Loan Pricing, And Farm Business Performance," Western Journal of Agricultural Economics, Western Agricultural Economics Association, vol. 14(1), pages 1-11, July.

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    Keywords

    Agribusiness; Agricultural Finance;

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