A deep dive into Weight-of-Evidence (WoE)

Welcome to our deep dive into Weight-of-Evidence, variable selection, credit modelling and more. In our previous post we defined Weight-of-Evidence (WoE), described how it is used as a feature transform, and explored a simple example. In this post we describe the why. When we understand the why, we'll be able to apply WoE with more understanding, hopefully leading to better models and more informed decisions.  In the previous post we defined the WoE  as: $$\mbox{WoE} = \ln \left( \frac{\mbox{good distribution}}{\mbox{bad distribution}}\right).$$This makes sense for credit risk modelling because, with this definition, positive values of WoE indicate a 'good' loan. Since [...]

A deep dive into Weight-of-Evidence (WoE)2022-02-21T13:20:48+02:00

A whirlwind introduction to Weight-of-Evidence (WoE)

Today, we're going to talk about Weight-of-Evidence (WoE) and how it is used in the field of credit modelling. If you're someone who understands the intricacies of Weight of Evidence (WoE), give yourself a pat on your back. If, on the other hand, you're unsure about what WoE is all about, we're here to help. Let's start at the beginning. Combined with logistic regression, WoE is a great method for binary classification. If you're a credit modeller in particular (which is the example we'll use), then there is even more reason to consider it. Before diving deeper, let's first discuss [...]

A whirlwind introduction to Weight-of-Evidence (WoE)2022-03-10T09:46:03+02:00

Why the cloud is ideal for credit modelling

  The cloud is here, and here to stay. By 2025, it's estimated that over 100 zettabytes of data will be stored in the cloud. And 95% of all data center traffic will pass through cloud data centers. Microsoft, Amazon, Google, IBM and others have all positioned their cloud offerings as a central component of their business strategy. It's not surprising that cloud adoption is accelerating: there are many benefits to computing in the cloud. Like most industries, many of these advantages resonate with the needs of the credit modelling industry. Together, we'll briefly explore why the cloud is ideal [...]

Why the cloud is ideal for credit modelling2022-01-18T08:59:42+02:00

Why Python is the future of credit modelling

If you've been paying any attention to the technology used by Fintech companies around the world, you would've undoubtedly heard of the meteoric rise of the Python programming language. Originally popular with academics, Python's easy-to-learn syntax, expressive power and ever-growing ecosystem has propelled the language to enormous popularity. Currently, Python is considered the first or second most popular programming language in the world. And is likely to remain popular for some time. It's no surprise the future of the credit modelling industry will be written in Python. How Python ate the world. Python has three key qualities that led to [...]

Why Python is the future of credit modelling2022-01-12T15:08:36+02:00
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