In this paper, logistic regression models containing random effects are explored as a means of simulating the decision process of commercial loan officers. Empirical Bayes estimates, determined with the EM Algorithm, are calculated for the random parameters. Analysis of data from a major...

Presents a set of quality measures which can be used to evaluate the effectiveness of credit scoring models. These measures comprised standard performance statistics in order to ensure widespread applicability. Calculates quality measures for actual scoring models in place at a Canadian bank.