an application of data mining scoring

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1、12Anapplicationofdatamining:scoringToprovideaspecificillustrationofthecontributionmadebytheapplicationofdataminingmethodsinthebusinessworld,thischapterwilldescribetheuseofanimportantbranchofdatamininginthefinanceindustry–thecalculationofscores.Itisbasedonthebusinessapplicatio

2、noftheclassificationtechniquesexaminedinthelastchapter.Whatisitthatbanksandfinancialinstitutionswishtopredict?Thisisthefirstthingtobeconsidered.Becauseofitsmanyyearsofuseanduniversalapplication,scoringcanbeseenasthearchetypalbusinessapplicationofdatamining.Ourexaminationofthis

3、topicwillalsoadddepthtotheknowledgeimpartedinChapter1,ontheuseofdatamining,andinChapter2,onwaysofimplementingadataminingproject.TheendofthischapterwillbeapracticalexampleofcreditscoringusingtwoofthemainclassificationmethodsdescribedinChapter11,namelylogisticregressionandtheD

4、ISQUALversionoflineardiscriminantanalysis.12.1ThedifferenttypesofscoreThemaintypesofscoreusedinbankingare:.propensityscores;.risk(behaviour)scores;.applicationscores;.recoveryscores;.attritionscores.Thesearedefinedasfollows.DataMiningandStatisticsforDecisionMaking,FirstEditi

5、on.Ste´phaneTuffe´ry.Ó2011JohnWiley&Sons,Ltd.Published2011byJohnWiley&Sons,Ltd.556ANAPPLICATIONOFDATAMINING:SCORINGApropensityscoremeasurestheprobabilitythatacustomerwillbeinterestedinagivenproductorservice.Itiscalculatedforanindividualorahouseholdthathasbeenabankcustomerfo

6、rseveralmonths,basedondatadescribingtheoperationoftheiraccountsandbankingproductsduringthisperiod,aswellastheirsociodemographiccharacteristics.Arisk(behaviour)scoremeasurestheprobabilitythatacustomerwithacurrentaccount,bankcard,arrangedoverdraftorcreditagreementwillbeinvolv

7、edinapaymentorrepaymentproblem.Itiscalculatedforanindividualwhohasbeenabankcustomerforseveralmonths,basedonhissociodemographiccharacteristicsanddatadescribingtheoperationofhisaccountsandbankingproductsduringthisperiod.Itisthereforeabehaviouralriskscore.Cross-tabulatingthese

8、firsttwoscoresgiveswhatissometimescalledapre-acceptancescore,asitprovidesacreditcus