Research On Credit Risk Early Warning Of Small Loan Company Based On Decision Tree Technology

Since 2014,the national economy is facing downward pressure,part of the enterprises have the phenomenon of enterprise insolvency,capital chain rupture and the debt is not returned,etc.These make microfinance companies,which focus on lend as the main business,face great challenges of survival.Therefore,according to the operating characteristics of small loan companies,we build a scientific and reasonable credit risk early warning model.It is of great theoretical and practical significance to use the model to predict the default risk and reduce the probability of risk.First of all,on the basis of field investigation of the JH small loan company in Shandong province,this paper selects data from 2013 to 2015 as samples.Combined with expert interviews and literature reference method,this paper established credit risk index system for individual customers and corporate clients according to the operating characteristics of small loan companies.By using normal test,nonparametric test and factor analysis method to carry on the index selection.Secondly,according to the difference of the index system and the characteristics of the sample data for individual customers and corporate clients,we use the CHAID algorithm as the method of individual customer credit risk early warning,and the C5.0 algorithm as the method of company customer credit risk early warning.In this paper,the decision tree model is constructed by training samples,and the accuracy of the model is verified by the test samples.The empirical results show that the small loan company's credit risk factors are complex.Therefore,it is necessary to build the index system according to the different customer groups,and select the index variables into the model.According to the characteristics of individual customers and corporate customers to select a suitable algorithm to construct a credit risk early-warning model of microfinance companies based on decision tree technology,which can accurately predict credit risk.The early warning model of credit risk has strong practicability,which is conducive to the small loan companies to prevent risks,reduce the default rate and promote the sustained and healthy development of the industry.