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The Use Of Fuzzy Logic While Modeling The Creditworthiness Of Legal Entities

Author

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  • Olga Palamarchuk

    (Kyiv National Economics University named after Vadym Hetman, Ukraine)

Abstract

The purpose of the article is to develop a methodological approach to support the decision-making process in determining the creditworthiness of legal entities, as well as to create economic mathematical models based on this approach using the theory of fuzzy logic and fuzzy sets. Methodology. In the author's work (Palamarchuk, 2013), 49 real financial statements (Form 1 and Form 2) of Ukrainian enterprises were selected, 25 of which were potentially bankrupt and 24 were normally operating enterprises. As a result, 7 coefficients were obtained. Here we continue our modelling and building rule base. Result of the experiment is based on statistical data of domestic enterprise. The model has been constructed with the use of theory of fuzzy logic. Considering the expert knowledge, this model helps to make decisions on whether to provide the legal entity with the loan. Practical implications. The model and methodology can be used in commercial banks of Ukraine for calculating application risks. The known models do not fit to every economy. This is the reason which provides value originality of the topic of this study, which solves the problem of creating a method that would give the most sufficient assessment of creditworthiness.

Suggested Citation

  • Olga Palamarchuk, 2020. "The Use Of Fuzzy Logic While Modeling The Creditworthiness Of Legal Entities," Green, Blue & Digital Economy Journal, Publishing house "Baltija Publishing", vol. 1(2).
    • Handle: RePEc:bal:gbadej:2661-5169:2020:1:2:10
    DOI: 10.30525/2661-5169/2020-2-10
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    More about this item

    Keywords

    creditworthiness; default; fuzzy logic; legal entity; bankruptcy; stable enterprise; term;
    All these keywords.

    JEL classification:

    • C30 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - General
    • C53 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Forecasting and Prediction Models; Simulation Methods
    • C83 - Mathematical and Quantitative Methods - - Data Collection and Data Estimation Methodology; Computer Programs - - - Survey Methods; Sampling Methods
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • O50 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - General

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