A hybrid intelligent model based on logistic regression and fuzzy multiple-attribute decision-making for credit evaluation

Abstract

. One of the crucial issues in data mining is to select an appropriate classification algorithm. Due to it usually involves many criteria, the duty of algorithm selection can be widely described as multiple-attribute decision-making (MADM) problems, including credit risk evaluation. Many different MADM approaches select classifiers based on different perspectives, and hence they might generate diverse classifiers' rankings. This paper aims to propose a hybrid intelligent model to overcome credit risk assessment problems based on logistic regression and the fuzzy MADM method. Firstly, the Ordinal Priority Approach (OPA) method evaluates attributes involved in credit risk problems by considering professional assessments of a decision-maker and calculates a weight for each criterion. Secondly, all categorical data converted into triangular-fuzzy numbers (TFNs) and numerical data are evaluated using the MADM instrument to obtain an optimal solution dataset and logistic regression to calculate the probabilities of the optimal dataset. In this experimental study, three existing classification techniques and the proposed intelligent model evaluate three banking credit datasets with a different number of criteria under numerical and categorical data types. The prediction accuracy results generated by the proposed model are compared with the three existing classification methods. The results exhibit that there are slight differences between the three datasets. The experimental results demonstrate the proposed intelligent model has superiority in classifying the credit loan recipients especially for categorical datasets.

Keywords

• classification, credit loans, fuzzy multiple-attribute decision-making, logistic regression