The Consumer Loan’s Payment Default Predictive Model: an Application of the Logistic Regression and the Discriminant Analysis in a Tunisian Commercial Bank

Abstract

Consumer credit scoring is often considered as a classification task where borrowers receive a good or a bad credit status. The current paper attempts to uncover the issue of allocating credits to bad borrowers. In this respect, consumer credit scoring is a measure taken to overcome challenges encountered by Tunisian banks in the process of granting credits. These challenges stand as initiatives to enable banks to predict the future performance of borrowers, to determine the optimal credit limit with regard to the applicants’ repayment behavior, and to ensure their efficiency through automating the credit-granting decision process.