Create an India credit risk(default) model, using the data provided in the spreadsheet raw-data.xlsx, and validate it on validation_data.xlsx. Please use the logistic regression framework to develop the credit default model.
Data description – Please direct them to the video – Default Risk Prediction. After removing variables for multicollinearity, we should try to take at least one variable for creating the model from each of the 4 factors namely –
4) Company’s size
For Default Risk Estimation, all the variables are bifurcated in different buckets in the categories tab in raw_data file.
Creation of new variables – This is an important step in the project as the company which is the biggest in size, will also have bigger asset size, cash flows, etc. (Hint: We need to think in terms of ratios – Equity to asset ratio, debt to equity ratio, etc)
Dependent variable – We need to create a default variable which should take the value of 1 when net worth is negative & 0 when net worth is positive.
Validation Dataset – We need to build the model on the raw dataset and check the model performance measures on the validation dataset.
Please find attached the files to be referred.
Please note the following:
1. Outlier Treatment – Outlier Treatment
2. Missing Value Treatment
3. New Variables Creation (One ration for profitability, leverage, liquidity and company’s size each )
4. Check for multicollinearity
5. Univariate & bivariate analysis
6. Build Logistic Regression Model on most important variables
7. Analyze coefficient & their signs
8. Predict accuracy of model on dev and validation datasets
9. Sort the data in descending order based on probability of default and then divide into 10 deciles based on probability & check how well the model has performed
Delivering a high-quality product at a reasonable price is not enough anymore.
That’s why we have developed 5 beneficial guarantees that will make your experience with our service enjoyable, easy, and safe.
You have to be 100% sure of the quality of your product to give a money-back guarantee. This describes us perfectly. Make sure that this guarantee is totally transparent.Read more
Each paper is composed from scratch, according to your instructions. It is then checked by our plagiarism-detection software. There is no gap where plagiarism could squeeze in.Read more
Thanks to our free revisions, there is no way for you to be unsatisfied. We will work on your paper until you are completely happy with the result.Read more
Your email is safe, as we store it according to international data protection rules. Your bank details are secure, as we use only reliable payment systems.Read more
By sending us your money, you buy the service we provide. Check out our terms and conditions if you prefer business talks to be laid out in official language.Read more