It has been argued that flexible classification models such as neural networks, support vector machines, and random forests face resistance as credit scoring models because it is difficult to identify which characteristics contribute substantially to the overall scores. In fact, however, this is...

In contrast to decision models which use in-sample scenarios we use out-of-sample scenarios to conduct simulation and decision evaluation including backtesting. We propose two simulation methodologies and describe six decision evaluation techniques that can be applied to test the performance of...