Decision trees are a widely used knowledge representation in machine learning. However, one of their main drawbacks is the inherent replication of isomorphic subtrees, as a result of which the produced classifiers might become too large to be comprehensible by the human experts that have to...

Credit-risk evaluation is a very challenging and important management science problem in the domain of financial analysis. Many classification methods have been suggested in the literature to tackle this problem. Neural networks, especially, have received a lot of attention because of their...

We address an important issue in knowledge discovery using neural networks that has been left out in a recent article "Knowledge discovery using a neural network simultaneous optimization algorithm on a real world classification problem" by Sexton et al. [R.S. Sexton, S. McMurtrey, D.J....

The introduction of the Basel II Accord has had a huge impact on financial institutions, allowing them to build credit risk models for three key risk parameters: PD (probability of default), LGD (loss given default) and EAD (exposure at default). Until recently, credit risk research has focused...

In this paper, we try to validate existing theory on and develop additional insight into repeat-purchase behavior in a direct marketing setting by means of an illuminating case study. The case involves the detection and qualification of the most relevant RFM (Recency, Frequency and Monetary)...

Traditionally, credit scoring aimed at distinguishing good payers from bad payers at the time of the application. The timing when customers default is also interesting to investigate since it can provide the bank with the ability to do profit scoring. Analysing when customers default is...

he Basel II capital accord encourages financial institutions to develop rating systems for assessing the risk of default of their credit portfolios in order to better calculate the minimum regulatory capital needed to cover unexpected losses. In the internal ratings based approach, financial...