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Consumer Credit Scoring


  • Costangioara, Alexandru

    () (Oradea University, Faculty of Economic Studies)


After presenting the main issues in consumer credit market and introducing the issue of credit scorecards, I have used statistical modeling to predict the default probabilities of applicants in a dataset of consumer loans. I have found evidence for the superior accuracy of complex non-linear estimations. In particular, the bagging model offers better results than the traditional tree and logit estimations. The proposed statistical scorecard offers a 60 percent improvement over the baseline model. Lastly, this paper argues that the management must establish a decisional probability threshold in accordance with its propensity for risk. A higher threshold requires a greater promotional effort, although the increased costs may be compensated by a more efficient communication with clients and by more flexible contractual clauses.

Suggested Citation

  • Costangioara, Alexandru, 2011. "Consumer Credit Scoring," Journal for Economic Forecasting, Institute for Economic Forecasting, vol. 0(3), pages 162-177, September.
  • Handle: RePEc:rjr:romjef:v::y:2011:i:3:p:162-177

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    References listed on IDEAS

    1. Adrian Blundell-Wignall & Paul Atkinson, 2010. "Thinking beyond Basel III: Necessary Solutions for Capital and Liquidity," OECD Journal: Financial Market Trends, OECD Publishing, vol. 2010(1), pages 9-33.
    2. Rinaldi, Laura & Sanchis-Arellano, Alicia, 2006. "Household debt sustainability: what explains household non-performing loans? An empirical analysis," Working Paper Series 570, European Central Bank.
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    More about this item


    credit market; prudential regulation; statistical scorecards; logit; bagging estimations;

    JEL classification:

    • C13 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Estimation: General
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages


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