Browsing by Author "Tesfaye, Mengistu"

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    The Application of Data Mining in Credit Risk Assessment: The Case of United Bank Sc
    (Addis Ababa University, 2013-06) Tesfaye, Mengistu; Teferi, Dereje (PhD)
    Credit facilities and investments are the cornerstones of the growing economy of Ethiopia. United Bank being one of the former private banks has played its own role in the economy by rendering loan facilities to the individuals and companies which are running business in various sectors. The bank uses internal and NBE credit policies, procedures and strictly followed manuals in various levels of credit committees before disbursing loan to customers. However, there are total defaulters and inconsistent loan repaying customers which declines the profitability of the bank in particular and threatens the growing economy of the country in general. While fueling the sprinting economy in the country, minimizing the possible defaulters is the prime concern of the bank. Identifying customers and contracts which are more likely to be inconsistent loan payers or defaulters is an important issue. This data mining research has been carried out to identify trends of good and bad or NPL (non-performing loan) patterns from the historic data and build predictive Model to assist the management of the bank. This research has used the last 7 years credit data of United Bank and applied various preprocessing activities to clean the data. An experiment has been conducted using the CRISP-DM (2000) Model using WEKA tool. Different parameters of WEKAJ48 Decision tree and Naïve Bayes classification algorithm were applied. The model developed using the J48 decision tree algorithm has showed highest classification accuracy of 96.6%. Generally, the result of this study has showed that the application of data mining in Credit data can bring valuable input to assist the decision of credit committees and management.