Given that your bank has just implemented the internal ratings based (IRB) foundation approach of determining...
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Given that your bank has just implemented the internal ratings based (IRB) foundation approach of determining probability of default. Suppose your credit risk manager tasked you to develop an appropriate model for estimating the probability of default of prospective loan applicants (application scorecard) with the bank. The attached is dataset of the retail credit portfolio with the following variable definitions. Retail Credit Portfolio Dataset • loan_dataset • A sample size of 25000 Customers • They are 9 variables captured: • loan_status (1 = default, 0 = repaid) • loan_amount (total loan amount in GHS) • rate (annual interest rate) • emp_length (Totalyears in employment) • gender (1= Male, 0= Female) • Ratings (calculated score of credit-worthiness, the higher the better) home_ownership(where the customer lives, Mortage/Rent/Own/Others) annual_income (Annual income in GHS) age (Age in years since his/her birth) Perform the following activities: a) Formulate a logit model using loan amount, rate, gender, annual_income emp_length, and home_ownership as independent variables. The variable of interest is loan status Given that your bank has just implemented the internal ratings based (IRB) foundation approach of determining probability of default. Suppose your credit risk manager tasked you to develop an appropriate model for estimating the probability of default of prospective loan applicants (application scorecard) with the bank. The attached is dataset of the retail credit portfolio with the following variable definitions. Retail Credit Portfolio Dataset • loan_dataset • A sample size of 25000 Customers • They are 9 variables captured: • loan_status (1 = default, 0 = repaid) • loan_amount (total loan amount in GHS) • rate (annual interest rate) • emp_length (Totalyears in employment) • gender (1= Male, 0= Female) • Ratings (calculated score of credit-worthiness, the higher the better) home_ownership(where the customer lives, Mortage/Rent/Own/Others) annual_income (Annual income in GHS) age (Age in years since his/her birth) Perform the following activities: a) Formulate a logit model using loan amount, rate, gender, annual_income emp_length, and home_ownership as independent variables. The variable of interest is loan status
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