BUSINESS INFORM №12-2018

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Section: Economic and Mathematical Modeling
UDC 330.43
Kovpak E. О., Tumanova Y. H.
Calculating the Credit Limit for Individual Borrower on the Basis of Logit-Model (p. 162 - 169)
The research is aimed at developing an algorithm for valuation by credit institution of the credit limit for a natural person-borrower, with regard to his socio-demographic characteristics, using the logistic regression tools. The improvement of the procedure for valuation of the solvency of an individual borrower is to integrate an empirical approach to the definition of solvency (based on the ratio of official income and expenditure of an individual) with the economic and mathematical methods, allowing to consider the available retrospective data of the financial institution about borrowers and to identify statistically significant regularities. The key role in the algorithm of estimation of credit limit is occupied by development of the logit-model for classification of borrowers for classes of «reliable» and «unreliable», the classification force of which will be to a large extent determinative as to the predictive quality of defining the amount of the credit limit. The publication presents an example of application of the logit-model for credit scoring, including quantitative and qualitative variables, with the help of which the socio-demographic characteristics of borrowers are described. The procedure of using the proposed algorithm is illustrated on the basis of such logit-model.
Keywords: credit limit, logistic regression, credit scoring, solvency estimation, fictitious variables.
Fig.: 1. Tabl.: 3. Formulae: 9. Bibl.: 8.

Kovpak Elvira О. – Candidate of Sciences (Economics), Associate Professor, Associate Professor, Department of Economic Cybernetics and Applied Economics, V. N. Karazin Kharkiv National University (4 Svobody Square, Kharkіv, 61022, Ukraine)
Email: [email protected]
Tumanova Yuliia H. – Student, V. N. Karazin Kharkiv National University (4 Svobody Square, Kharkіv, 61022, Ukraine)
Email: [email protected]

Article is written in Ukrainian
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Reference to this article:
Kovpak, Elvira О., and Tumanova, Yuliia H. (2018) “Calculating the Credit Limit for Individual Borrower on the Basis of Logit-Model.” Business Inform 12:162–169.

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