Emerging Trends in Deep Learning for Credit Scoring: A Review

Abstract

This systematic review aims to provide deep insights on emerging trends in, and the potential of, advanced deep learning techniques, such as machine learning algorithms being partially replaced by deep learning (DL) algorithms for credit scoring owing to the higher accuracy of the latter. This review also seeks to explain the reasons that deep belief networks (DBNs) can achieve higher accuracy than shallower networks, discusses the potential classification capabilities of DL-based classifiers, and bridges DL and explainable credit scoring. The theoretical characteristics of DBNs are also presented along with the reasons for their higher accuracy compared to that of shallower networks. Studies published between 2019 and 2022 were analysed to review and compare the most recent DL techniques that have been found to achieve higher accuracies than ensemble classifiers, their hybrids, rule extraction methods, and rule-based classifiers. The models reviewed in this study were evaluated and compared according to their accuracy and area under the receiver operating characteristic curve for the Australian, German (categorical), German (numerical), Japanese, and Taiwanese datasets, which are commonly used in the credit scoring community. This review paper also explains how tabular datasets are converted into images for the application of a two-dimensional convolutional neural network (CNN) and how “black box” models using local and global rule extraction and rule-based methods are applied in credit scoring. Finally, a new insight on the design of DL-based classifiers for credit scoring datasets is provided, along with a discussion on promising future research directions.