An artificial intelligence system for predicting customer default in e-commerce

The purpose is to effectively manage the financial market, comprehensive assess personal credit, reduce the risk of financial enterprises. Given the systemic risk problem caused by the lack of credit scoring in the existing financial market, a credit scoring model is put forward based on the deep learning network. The proposed model uses RNN (Recurrent Neural Network) and BRNN (Bidirectional Recurrent Neural Network) to avoid the limitations of shallow models. Afterward, to optimize path analysis, bionic optimization algorithms are introduced, and an integrated deep learning model is proposed. Finally, a financial credit risk management system using the integrated deep learning model is proposed. The probability of default or overdue customers is predicted through verification on three real credit data sets, thus realizing the credit risk management for credit customers.

This chapter examines the capability of Genetic Programming (GP) and different Artificial Neural Network (ANN) (Backpropagation [BP] and Generalized Regression Neural Network [GRNN]) models for prediction of air entrainment rate (QA) of triangular sharp-crested weir. The basic principal of GP has been taken from the concept of Genetic Algorithm (GA). Discharge (Q), drop height (h), and angle in triangular sharp-crested weir (?) are considered as inputs of BP, GRNN, and GP. Coefficient of Correlation (R) has been used to assess the performance of developed GP, BP, and GRNN models. For a perfect model, the value of R should be close to one. A sensitivity analysis has been carried out to determine the effect of each input parameter. This chapter presents a comparative study between the developed BP, GRNN, and GP models.

Brittleness of the rock is one of the most critical features for design of underground excavation project. Therefore, proper estimating of rock brittleness can be very useful for designers and evaluators of geotechnical applications. In this study, feasibility of genetic programming (GP) model in predicting brittleness of the rock samples is examined. In this regard, several laboratory tests including uniaxial compressive strength, Brazilian, density and punch penetration were conducted on 48 rock samples collected from various locations of India. Considering multiple-inputs, several GP models were constructed to estimate brittleness index (BI) of the rock and finally, the best GP model was selected. Note that, GP can make an equation for predicting output of the system using model inputs. To show applicability of the developed GP model, non-linear multiple regression (NLMR) was also applied and developed. Considering some model performance indices, performance prediction of the GP and NLMR models were evaluated and it was found that the GP model is superior to NLMR one. Based on coefficient of determination (R2) of testing datasets, by proposing GP model, it can be improved from 0.882 (which was obtained by NLMR model) to 0.904. It is worth mentioning that the proposed predictive models in this study should be planned and used for the same conditions and the established inputs ranges.

The comparisons of data mining techniques for the predictive accuracy of probability of default of credit card clients

Utilization of SVM, LSSVM and GP for Predicting the Medical Waste Generation

The prediction of wastes generated in the hospital will help their management for several activities like storage, transport and disposing. This chapter adopts Support Vector Machine (SVM), Least Square Support Vector Machine (LSSVM) and Genetic Programming (GP) in order to estimate the rate of medical waste generation. In the event of predicting the rate, type of hospital, capacity and bed occupancy has been used as inputs of SVM, LSSVM and GP. SVM is based on statistical learning theory, which provides an elegant tool for nonlinear system modeling. LSSVM is the re-formulation to the general SVM. GP, a best part of evolutionary algorithm and also the specification of Genetic Algorithm (GA). These SVM, LSSVM and GP have been used as the regression techniques. The results show the performance of the developed SVM, LSSVM and GP models were elegant and outstanding.

In this paper we consider a credit scoring problem. We compare three powerful credit scoring models: genetic programming (GP), backpropagation neural networks (BP) and support vector machines (SVM) when applied to this problem, then we give a combined model. The results show that the combined model produces good classification results.

One of the most important aspects of risk management for financial institutions is assessing credit risk. Credit scoring models are important tools for evaluating loan applications because they provide a systematic way to assess credit worthiness. While traditional statistical models have been widely used, artificial intelligence (AI) has emerged as a more efficient alternative due to its ability to process large datasets and improve predictive accuracy. The growing reliance on AI-powered models has transformed lending practices, improving decision-making, reducing default risks, and enhancing financial stability. The focus of this research is on exploring AI-based credit scoring models and their impact on financial institutions. Traditional credit scoring methods often lack accuracy and efficiency, leading to increased risks and losses. AI methods like machine learning and deep learning offer a more reliable method, analyzing huge amounts of data and spot patterns that people are not aware of. Gaining insight into how AI affects credit scoring helps with risk management, loan selection, and financial inclusion. Other options for A1, A2, A3, A4, and A5. Income level, credit score, existing debt, and recent credit inquiries are all part of the assessment. The results showed that A3 ranked lowest and A4 ranked best. A1 has the highest value for The Role of AI in Enhancing Credit Scoring Models for Better Lending according to the TOPSIS Method approach.

The prediction of wastes generated in the hospital will help their management for several activities like storage, transport and disposing. This chapter adopts Support Vector Machine (SVM), Least Square Support Vector Machine (LSSVM) and Genetic Programming (GP) in order to estimate the rate of medical waste generation. In the event of predicting the rate, type of hospital, capacity and bed occupancy has been used as inputs of SVM, LSSVM and GP. SVM is based on statistical learning theory, which provides an elegant tool for nonlinear system modeling. LSSVM is the re-formulation to the general SVM. GP, a best part of evolutionary algorithm and also the specification of Genetic Algorithm (GA). These SVM, LSSVM and GP have been used as the regression techniques. The results show the performance of the developed SVM, LSSVM and GP models were elegant and outstanding.

Neighborhood rough set and SVM based hybrid credit scoring classifier

Credit risk management has become a must in this era due to the increase in the number of businesses defaulting. Building upon the legacy of Kealhofer, McQuown, and Vasicek (KMV), a mathematical model is introduced based on Merton model called KMV-Merton model to predict the credit risk of firms. The KMV-Merton model is commonly used in previous default studies but is said to be lacking in necessary detail. Hence, this study aims to combine the KMV-Merton model with the financial ratios to determine the firms’ credit scores and ratings. Based on the sample data of four firms, the KMV-Merton model is used to estimate the default probabilities. The data is also used to estimate the firms’ liquidity, solvency, indebtedness, return on asset (ROA), and interest coverage. According to the weightages established in this analysis, scores were assigned based on those estimates to calculate the total credit score. The firms were then given a rating based on their respective credit score. The credit ratings are compared to the real credit ratings rated by Malaysian Rating Corporation Berhad (MARC). According to the comparison, three of the four companies have credit scores that are comparable to MARC’s. Two A-rated firms and one D-rated firm have the same ratings. The other receives a C instead of a B. This shows that the credit scoring technique used can grade the low and the high credit risk firms, but not strictly for a firm with a medium level of credit risk. Although research on credit scoring have been done previously, the combination of KMV-Merton model and financial ratios in one credit scoring model based on the calculated weightages gives new branch to the current studies. In practice, this study aids risk managers, bankers, and investors in making wise decisions through a smooth and persuasive process of monitoring firms’ credit risk.

PurposeThis paper aims to present a literature review of the most recent optimisation methods applied to Credit Scoring Models (CSMs).Design/methodology/approachThe research methodology employed technical procedures based on bibliographic and exploratory analyses. A traditional investigation was carried out using the Scopus, ScienceDirect and Web of Science databases. The papers selection and classification took place in three steps considering only studies in English language and published in electronic journals (from 2008 to 2022). The investigation led up to the selection of 46 publications (10 presenting literature reviews and 36 proposing CSMs).FindingsThe findings showed that CSMs are usually formulated using Financial Analysis, Machine Learning, Statistical Techniques, Operational Research and Data Mining Algorithms. The main databases used by the researchers were banks and the University of California, Irvine. The analyses identified 48 methods used by CSMs, the main ones being: Logistic Regression (13%), Naive Bayes (10%) and Artificial Neural Networks (7%). The authors conclude that advances in credit score studies will require new hybrid approaches capable of integrating Big Data and Deep Learning algorithms into CSMs. These algorithms should have practical issues considered consider practical issues for improving the level of adaptation and performance demanded for the CSMs.Practical implicationsThe results of this study might provide considerable practical implications for the application of CSMs. As it was aimed to demonstrate the application of optimisation methods, it is highly considerable that legal and ethical issues should be better adapted to CSMs. It is also suggested improvement of studies focused on micro and small companies for sales in instalment plans and commercial credit through the improvement or new CSMs.Originality/valueThe economic reality surrounding credit granting has made risk management a complex decision-making issue increasingly supported by CSMs. Therefore, this paper satisfies an important gap in the literature to present an analysis of recent advances in optimisation methods applied to CSMs. The main contribution of this paper consists of presenting the evolution of the state of the art and future trends in studies aimed at proposing better CSMs.

In this study, the capacity of artificial neural networks (ANNs) and genetic programming (GP) in making possible, fast and reliable predictions of equilibrium compositions of alkane binary mixtures is investigated. A data set comprising 847 data points was gathered and used in both training the proposed ANN and generating the closed-form expressions of the GP procedure. The results obtained demonstrate the relative precision of the proposed ANN, while, on the other hand, exhibit that the GP model, although less precise, affords high CPU time efficiency and simplicity. Concisely, the proposed models can serve the purpose of being close first estimates for more thermodynamically rigorous vapor–liquid equilibrium calculation procedures and do obviate the necessity for the availability of a large set of experimental binary interaction coefficients. Mean absolute errors of 0.0100 and 0.0404 for liquid compositions and of 0.0054 and 0.0254 for vapor-phase mole fractions, for the proposed ANN and GP models, respectively, are a testament to the reliability of the proposed models.

Background: Large financial companies are perpetually creating and updating customer scoring techniques. From a risk management view, this research for the predictive accuracy of probability is of vital importance than the traditional binary result of classification, i.e., non-credible and credible customers. The customer's default payment in Taiwan is explored for the case study. Objective: The aim is to audit the comparison between the predictive accuracy of the probability of default with various techniques of statistics and machine learning. Method: In this paper, nine predictive models are compared from which the results of the six models are taken into consideration. Deep learning-based H2O, XGBoost, logistic regression, gradient boosting, naïve Bayes, logit model, and probit regression comparative analysis is performed. The software tools such as R and SAS (university edition) is employed for machine learning and statistical model evaluation. Results: Through the experimental study, we demonstrate that XGBoost performs better than other AI and ML algorithms. Conclusion: Machine learning approach such as XGBoost effectively used for credit scoring, among other data mining and statistical approaches.

Credit risk analysis forms an important criterion for the endurance of the banking sector. Understanding credit liability of customer enhances the security stability of the banker. This research is aimed at comparing the predictive accuracy of data mining techniques with feature selection and extraction techniques in the default of credit card clients and suggesting the most efficient technique for analyzing credit card default. Customer's default payments in Taiwan were used as the dataset. Machine Learning classification algorithms like K-nearest neighbor(KNN), Naive Bayesian(NB), Decision Tree(DT) and Support Vector Machines(SVM) were applied to the dataset. Feature filter methods like information gain (IG), gain ratio (GR) and chi-square (CS) and Wrapper based methods like Best First search(BFS) and Hill Climbing search (HCS) were used to identify minimum features required. Feature extraction methods such as Principal Component Analysis(PCA) and Linear Discriminant Anal-ysis(LDA) were also applied. The minimum features of feature selection algorithms along with PCA and LDA were then applied to Base classifiers and their accuracies were tabulated and compared. SVM with feature selection and extraction techniques had the best predictive accuracy.