StudentShare
Contact Us
Sign In / Sign Up for FREE
Search
Go to advanced search...

Reject inference applied on large data sets - Research Paper Example

Cite this document
Summary
When prospective customers approaches a bank for a loan, it is important to evaluate their credit worthiness or rather if they are likely to default on the loan. Therefore,…
Download full paper File format: .doc, available for editing
GRAB THE BEST PAPER95.5% of users find it useful
Reject inference applied on large data sets
Read Text Preview

Extract of sample "Reject inference applied on large data sets"

Download file to see previous pages

However, this assumption does not hold true in the case of application scoring. The modeling data set becomes inherently biased if the customers that are perceived to be “bad” are approved while those that are perceived to be “good” are rejected. It is a matter of fact that the only population’s performance that is known is for the approved, which apparently does not perform the same way as the rejected population, hence the rejection of this population is rather questionable. Notably, the selection bias does not take place if further bad rates are estimated using the approved population in the model alone.

Nonetheless, considering that the model is applicable to the whole population in order to decide who to reject and who to decline, the bias becomes a very important consideration. Correction and accounting for this sample bias is achieved by use of rejecting inference techniques. In view of this, a gap is present in any statistical model when known Good-Bad (KGB) of the approved population of loan applicants is used, because of the high sampling bias error that occurs. As a matter of fact, any analysis of characteristics is biased as a result of the ‘cherry selection’ of prospective good customers.

If bad rates across the whole population is truly described by the characteristics, then it is evident that the rate of approval by the same characteristics should be inversely related. For a case in point, if the customer has serviced loans without any problem for the last one year, then the subdivision’s general bad rate should be moderately small, and the approval rate from this subdivision should be large. Nevertheless, customers that hold at least 4 bad loans in the previous one year should be treated as a high credit risk.

As such, any approval in this segment should be assigned a variety of other ‘good’ characteristics to supersede offensive

...Download file to see next pages Read More
Cite this document
  • APA
  • MLA
  • CHICAGO
(“Reject inference applied on large data sets Research Paper”, n.d.)
Reject inference applied on large data sets Research Paper. Retrieved from https://studentshare.org/statistics/1614290-reject-inference-applied-on-large-data-sets
(Reject Inference Applied on Large Data Sets Research Paper)
Reject Inference Applied on Large Data Sets Research Paper. https://studentshare.org/statistics/1614290-reject-inference-applied-on-large-data-sets.
“Reject Inference Applied on Large Data Sets Research Paper”, n.d. https://studentshare.org/statistics/1614290-reject-inference-applied-on-large-data-sets.
  • Cited: 0 times

CHECK THESE SAMPLES OF Reject inference applied on large data sets

Statistics on Defensive efficiancy for NBA Basketball

The distribution of variables The available variables are these sets of data are in four pairs.... Name Instructor Course Date NBA Standings Introduction Statistics revolves around data collection, organizing or processing, analyzing, understanding and interpretation.... It also includes the plans involved in data collection, planning individual surveys, and the subsequent experiments.... This is an economic data analysis project that has incorporated different items in statistics....
5 Pages (1250 words) Research Paper

The Importance of Archaeological Dating for Understanding the Environment

k) Rehydroxylation dating Relative Techniques Indirect or relative methods tend to utilize associations assembled from archaeological bodies of data.... In practice a number of diverse dating techniques ought to be applied in various circumstances, consequently dating evidence for a large amount of an archaeological sequence documented in the course of an excavation necessitates matching data from identified absolute or a number of related steps, with a vigilant study of stratigraphic interactions....
5 Pages (1250 words) Essay

Process control and inspection

Use this data to determine the 'best' supplier.... The quality of the bought in items will be checked at the Material receipt if the components involved are small, value is small and quantity is large.... The vendor is marked with the reject quantity and any repeat of the same is tried and at best avoided....
4 Pages (1000 words) Assignment

Limitations and Requirements of ANOVA

The f-test, apart from being used to for t-tests, it can also be used to compare variations in two data sets in the CJ data.... The F test applied on the CJ data requires the independent distribution of the two variances.... For data to be analyzed using ANOVA, the points of data must be autonomous from each other.... For data to be analyzed using ANOVA, the points of data must be autonomous from each other....
2 Pages (500 words) Essay

To What Extent Is True Globalization Only a Recent Phenomenon

New methods of product differentiation and diversification have been learned after the acquisition of bid sets of data from a global platform.... This is made possible through scanning large sets of data at a glance in order to deduce customer preferences hence boosting sales revenues.... Additionally, the managers in many organizations have learned new management strategies through the recent access to large volumes of data.... According to Lechner (2009, 23), access to big data has led to the realization of new ways of achieving global customer satisfaction, continuous improvement, and total quality management within an organization....
6 Pages (1500 words) Term Paper

Prevention of Epidemics in Third World Countries Using Data Mining

This coursework "Prevention of Epidemics in Third World Countries Using data Mining" focuses on the art of collecting data from different sources and analyzing it with the aim of obtaining a summary of useful information.... hellip; In data mining, data is collected and looked at it through various dimensions.... This can be used to fight epidemics in third world countries by closely examining medical data about the region and coming up with solutions before they occur again....
8 Pages (2000 words) Coursework

Colloids Versuss Crystalloids

olloids: Colloids are usually large molecules that do not pass through the thin capillary walls and they exert an oncotic pressure that restores fluid balance.... This difference in effects has been clinically studied in the course of meta-analyses of mortality in randomized trials of critically ill patients applied with either colloids or crystalloids as comparative fluids applied for volume expansion.... They are usually applied to restore intravascular volume and improve tissue perfusion....
10 Pages (2500 words) Article

Application of Investigation Methodology in Construction Project

The difference is that under qualitative research the construction project investigation will scrutinize the content validity; and under quantitative research, there will be a collection of data that are specifically of the numerical kind.... This is also there in qualitative research, but here the data always cannot be in the context of being graphed.... The usability of qualitative data is more appropriate in concern to the explanation to the puzzling quantitative results in the construction project investigation....
10 Pages (2500 words) Literature review
sponsored ads
We use cookies to create the best experience for you. Keep on browsing if you are OK with that, or find out how to manage cookies.
Contact Us