Bayesian Networks as a Decision Support Tool in Credit Scoring Domain

Abstract

The main purpose of this article is to discuss applicability of Bayesian belief networks (BBN) within the procedures of working-capital credit scoring conducted in commercial banks. A brief description of Bayesian formulation of causal dependence and its strength is given. Inferential and diagnostic features of BBN are illustrated using sample structure. As an example we present and compare results of estimating a credit risk using two techniques: traditional credit-scoring system and BBN structure.