Forecasting creditworthiness in retail banking: a comparison of cascade correlation neural networks, CART and logistic regression scoring models

The preoccupation with modelling credit scoring systems including their relevance to forecasting and decision making in the financial sector has been with developed countries whilst developing countries have been largely neglected. The focus of our investigation is the Cameroonian commercial banking sector with implications for fellow members of the Banque des Etats de L’Afrique Centrale (BEAC) family which apply the same system. We investigate their currently used approaches to assessing personal loans and we construct appropriate scoring models. Three statistical modelling scoring techniques are applied, namely Logistic Regression (LR), Classification and Regression Tree (CART) and Cascade Correlation Neural Network (CCNN). To compare various scoring models’ performances we use Average Correct Classification (ACC) rates, error rates, ROC curve and GINI coefficient as evaluation criteria. The results demonstrate that a reduction in terms of forecasting power from 15.69% default cases under the current system, to 3.34% based on the best scoring model, namely CART can be achieved. The predictive capabilities of all three models are rated as at least very good using GINI coefficient; and rated excellent using the ROC curve for both CART and CCNN. It should be emphasised that in terms of prediction rate, CCNN is superior to the other techniques investigated in this paper. Also, a sensitivity analysis of the variables identifies borrower’s account functioning, previous occupation, guarantees, car ownership, and loan purpose as key variables in the forecasting and decision making process which are at the heart of overall credit policy

Predicting Happiness - Comparison of Supervised Machine Learning Techniques Performance on a Multiclass Classification Problem

In the modern world, especially in contemporary economies and politics, a population\u27s subjective well-being is a frequent subject of the public debate. As comparisons of happiness levels in different countries are published, different circumstances and their effect on the value of the subjective well-being reported by people are also analysed. However, a significant amount of the research related to subjective well-being and its determinants is still based upon survey answers and employing conventional statistical methods providing details regarding correlations and causality between different factors and subjective well-being. Application of Supervised Machine Learning techniques for prediction of subjective well-being may provide new ways of understanding how individual factors contribute to the concept value and allow for addressing any issues, which may potentially affect mental and physical health. The focus of this research is to use the survey data and make predictions regarding subjective well-being (a multiclass target) using Supervised Machine Learning models. In particular, the study is aimed at comparing the performance of two techniques: Decision Tree and Neural Networks. The „C4.5 algorithm‟ used by the Decision Trees is considered as the benchmark algorithm, to which other supervised learning algorithms should be compared. At the same time, Neural Networks were previously proven to have high predictive power, even with multiclass categorisation problems. Two experiments are conducted as part of this research, one using original highly imbalanced data; the other using the dataset balanced using SMOTE. The experimental results gathered show that for the first experiment there is no statistically significant difference (

Cost-sensitive learning and threshold-moving approach to improve industrial lots release process on imbalanced datasets

With Industry 4.0, companies must manage massive and generally imbalanced datasets. In an automotive company, the lots release decision process must cope with this problem by combining data from different sources to determine if a selected group of products can be released to the customers. This work focuses on this process and aims to classify the occurrence of customer complaints with a conception, tune and evaluation of five ML algorithms, namely XGBoost (XGB), LightGBM (LGBM), CatBoost (CatB), Random Forest(RF) and a Decision Tree (DT), based on an imbalanced dataset of automatic production tests. We used a non-sampling approach to deal with the problem of imbalanced datasets by analyzing two different methods, cost-sensitive learning and threshold-moving. Regarding the obtained results, both methods showed an effective impact on boosting algorithms, whereas RF only showed improvements with threshold-moving. Also, considering both approaches, the best overall results were achieved by the threshold-moving method, where RF obtained the best outcome with a F1-Score value of 76.2%.FCT - Fundação para a Ciência e a Tecnologia(UIDB/00319/2020

Customer retention

A research report submitted to the Faculty of Engineering and the Built Environment, University of the Witwatersrand, Johannesburg, in partial fulfillment of the requirements for the degree of Master of Science in Engineering. Johannesburg, May 2018The aim of this study is to model the probability of a customer to attrite/defect from a bank where, for example, the bank is not their preferred/primary bank for salary deposits. The termination of deposit inflow serves as the outcome parameter and the random forest modelling technique was used to predict the outcome, in which new data sources (transactional data) were explored to add predictive power. The conventional logistic regression modelling technique was used to benchmark the random forest’s results. It was found that the random forest model slightly overfit during the training process and loses predictive power during validation and out of training period data. The random forest model, however, remains predictive and performs better than logistic regression at a cut-off probability of 20%.MT 201

Quantifying soybean phenotypes using UAV imagery and machine learning, deep learning methods

Crop breeding programs aim to introduce new cultivars to the world with improved traits to solve the food crisis. Food production should need to be twice of current growth rate to feed the increasing number of people by 2050. Soybean is one the major grain in the world and only US contributes around 35 percent of world soybean production. To increase soybean production, breeders still rely on conventional breeding strategy, which is mainly a 'trial and error' process. These constraints limit the expected progress of the crop breeding program. The goal was to quantify the soybean phenotypes of plant lodging and pubescence color using UAV-based imagery and advanced machine learning. Plant lodging and soybean pubescence color are two of the most important phenotypes for soybean breeding programs. Soybean lodging and pubescence color is conventionally evaluated visually by breeders, which is time-consuming and subjective to human errors. The goal of this study was to investigate the potential of unmanned aerial vehicle (UAV)-based imagery and machine learning in the assessment of lodging conditions and deep learning in the assessment pubescence color of soybean breeding lines. A UAV imaging system equipped with an RGB (red-green-blue) camera was used to collect the imagery data of 1,266 four-row plots in a soybean breeding field at the reproductive stage. Soybean lodging scores and pubescence scores were visually assessed by experienced breeders. Lodging scores were grouped into four classes, i.e., non-lodging, moderate lodging, high lodging, and severe lodging. In contrast, pubescence color scores were grouped into three classes, i.e., gray, tawny, and segregation. UAV images were stitched to build orthomosaics, and soybean plots were segmented using a grid method. Twelve image features were extracted from the collected images to assess the lodging scores of each breeding line. Four models, i.e., extreme gradient boosting (XGBoost), random forest (RF), K-nearest neighbor (KNN), and artificial neural network (ANN), were evaluated to classify soybean lodging classes. Five data pre-processing methods were used to treat the imbalanced dataset to improve the classification accuracy. Results indicate that the pre-processing method SMOTE-ENN consistently performs well for all four (XGBoost, RF, KNN, and ANN) classifiers, achieving the highest overall accuracy (OA), lowest misclassification, higher F1-score, and higher Kappa coefficient. This suggests that Synthetic Minority Over-sampling-Edited Nearest Neighbor (SMOTE-ENN) may be an excellent pre-processing method for using unbalanced datasets and classification tasks. Furthermore, an overall accuracy of 96 percent was obtained using the SMOTE-ENN dataset and ANN classifier. On the other hand, to classify the soybean pubescence color, seven pre-trained deep learning models, i.e., DenseNet121, DenseNet169, DenseNet201, ResNet50, InceptionResNet-V2, Inception-V3, and EfficientNet were used, and images of each plot were fed into the model. Data was enhanced using two rotational and two scaling factors to increase the datasets. Among the seven pre-trained deep learning models, ResNet50 and DenseNet121 classifiers showed a higher overall accuracy of 88 percent, along with higher precision, recall, and F1-score for all three classes of pubescence color. In conclusion, the developed UAV-based high-throughput phenotyping system can gather image features to estimate soybean crucial phenotypes and classify the phenotypes, which will help the breeders in phenotypic variations in breeding trials. Also, the RGB imagery-based classification could be a cost-effective choice for breeders and associated researchers for plant breeding programs in identifying superior genotypes.Includes bibliographical references