Credit Evaluation of Small Enterprises Based on Indicators' Diversification Maximized Combination Weighting Model

Abstract

Determination of indicators’ weights is the key problem that needs to be addressed in small enterprises credit evaluation. Whether the indicators are reasonably or accurately weighted would directly afiect the reliability of a credit evaluation model. Based on indicators’ diversiflcation maximized method, the paper obtains combination weighting model from three single weighting models including G1 model, CRITIC model and di‐culty weighting model, establishes small enterprises credit risk evaluation model and tests the evaluation results by using difierent weighting models. The features and innovations of this paper are: flrst, based on the idea of deviation of indicators’ value from indicators’ average value maximizing, it determines the coe‐cient of combination weight by integrating the subjective and objective weights. It avoids the problem lying in the existing study that overlooks the diversiflcation of indicator’s value between overall statuses of indicators. Second, the evaluation results derived from difierent weighting models pass Spearman rank correlation coe‐cient test. It means that the credit evaluation result based on combination weighting model is in accordance with results from three single weighting models. Third, result of empirical study demonstrates that evaluation result based on indicators’ diversiflcation maximized combination weighting model achieves the best consistency and lowest FRR and FAR.