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ScorePlus also develops provisioning and portfolio projection models. Used together, these can provide the total financial picture for credit portfolios - projecting revenue, retention and bad debt.
ScorePlus has developed a non-linear regression modelling package
which will successfully project total portfolio movements, based on dynamic
delinquency matrices data. These models focus on life cycle, new account and
portfolio patterns to extrapolate past performance into future projections,
allowing sensitivities identified by business managers to be incorporated into
the forecast output.
Similar projection models developed by ScorePlus have successfully
adopted Markov Chain methodologies.
The underlying techniques are described in two published papers by Gerard
Scallan.
Note: In order to view these papers you will need Adobe Acrobat Reader v4.0 or higher.
Bad Debt Projection Models, Gerard Scallan, 1998
This paper gives an overview of modelling approaches for loss forecasting and provisioning and discusses triangular projection models.
Download Now (Document Size: 405KB)
Markov Models - An Introduction, Gerard Scallan, 1990
This paper introduced an effective new approach to bad debt projection. Markov models allow your company to take account of profit-line dynamics.
Download Now (Document Size: 237KB)
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