Publication

Dynamic Valuation of Delinquent Credit-Card Accounts

2012
Working Papers

Abstract

This paper presents a model for the estimation of the repayment process of delinquent credit-card accounts conditional on account-specific and macroeconomic information. Based on this model we construct a dynamic collectability score (DCS). The DCS estimates the account-specific probability of collecting a given percentage of outstanding debt over a chosen time horizon. It also allows for account valuation and estimation of the future repayment frequency. The method is tested using a large set of account-level repayment data. The improvements in classification and prediction performance compared to standard bank-internal scoring methods are significant.

Official source

https://infoscience.epfl.ch/entities/publication/61f3155a-ecee-4a82-9909-6bacf34a75ba

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2012
Working Papers

Abstract

Official source

https://infoscience.epfl.ch/entities/publication/61f3155a-ecee-4a82-9909-6bacf34a75ba

About this result

Related concepts (32)

Valuation (finance)

In finance, valuation is the process of determining the value of a (potential) investment, asset, or security. Generally, there are three approaches taken, namely discounted cashflow valuation, relative valuation, and contingent claim valuation. Valuations can be done for assets (for example, investments in marketable securities such as companies' shares and related rights, business enterprises, or intangible assets such as patents, data and trademarks) or for liabilities (e.g., bonds issued by a company).

Business valuation

Business valuation is a process and a set of procedures used to estimate the economic value of an owner's interest in a business. Here various valuation techniques are used by financial market participants to determine the price they are willing to pay or receive to effect a sale of the business.

Stock valuation

In financial markets, stock valuation is the method of calculating theoretical values of companies and their stocks. The main use of these methods is to predict future market prices, or more generally, potential market prices, and thus to profit from price movement – stocks that are judged undervalued (with respect to their theoretical value) are bought, while stocks that are judged overvalued are sold, in the expectation that undervalued stocks will overall rise in value, while overvalued stocks will generally decrease in value.