Abstract
Credit cards constitute one of the most common forms of credit, which is mainly used by consumers to cover their daily expenses. The increasing demand for credit cards during the last two decades, has necessitated the development of evaluating systems to reduce the credit risk. Generally, decisions regarding credit card evaluation involve the acceptance or the rejection of a credit card application on the basis of the applicant’s personal and business profile, which is usually described through both quantitative and qualitative factors. The objective of this paper is to present the application of multicriteria decision aid (MCDA) in credit card evaluation. For this purpose, three preference disaggregation methodologies are applied in a sample consisting of 150 credit card applications which were submitted for consideration to the National Bank of Greece during the period 1995–1996.
Access this chapter
Tax calculation will be finalised at checkout
Purchases are for personal use only
Preview
Unable to display preview. Download preview PDF.
References
Ausubet, L. (1991), “The failure of competition in credit-card market”, The American Economic Review 91, 3, 50 – 81.
Bergeron, M., Martel, J.M. and Twarabimenye, P. (1997), “The evaluation of corporate loan applicati.ons based on the MCDA”, Journal of Euro-Asian Management (in press).
Carter, C. and Catlett, J. (1987), “Assessing credit card applications using machine learning”, IEEE Expert, Fall, 71–79.
Damaskos, X.S. (1997), Decision models for the evaluation of credit cards: Application of the mutticriteria method ELECTRE TRI, Masters Thesis, Technical University of Crete, Chania, Greece (in Greek).
Devaud, J.M., Groussaud, G. and Jacquet-Lagrèze, E. (1980), “UTADIS: Une méthode de construction de fonctions d’utilité additives rendant compte de jugements globaux”, European Working Group on Multicriteria Decision Aid, Bochum.
Dimitras, A.I., Zopounidis, G., and Hurson, C. (1995), “A multicriteria decision aid method for the assessment of business failure risk”, Foundations of Computing and Decision Sciences 20,2,99–112.
Eisenbeis, R. (1977), “The pitfalls in the application of discriminant analysis in business, finance and economics”, The Journal of Finance 32,723–739.
Jacquet-Lagrèze, E. (1995), “An application of the UTA discriminant model for the evaluation of R & D projects”, in: P.M. Pardalos, Y. Siskos and C. Zopounidis (eds.), Advances in Multicriteria Analysis, Kluwer Academic Publishers, Dordrecht, 203–211.
Jacquet-Lagrèze, E. and Siskos, Y. (1982), “Assessing a set of additive utility functions for multicriteria decision making: The UTA method”, European Journal of Operational Research 10,151–164.
Jensen, J.L. (1992), “Using neural networks for credit scoring”, Managerial Finance 18,15–26.
Nikbakht, E. and Tafti, M.H.A (1989), “Applications of expert systems in evaluation of credit card borrowers”, Managerial Finance 15,5,19–27.
Pardalos, P.M., Siskos, Y. and Zopounidis, C. (1995), Advances in Multicriteria Analysis, Kluwer Academic Publishers, Dordrecht
Slowinski, R., and Zopounidis, C. (1995), “Application of the rough set approach to evaluation of bankruptcy risk”, International Journal of Intelligent Systems in Accounting, Finance and Management 4,27–41.
Zopounidis, C. (1987), “A multicriteria decision-making methodology for the evaluation of the risk of failure and an application”, Foundations of Control Engineering 12,1, 45–67.
Zopounidis, C. (1997), “Multicriteria decision aid in financial management”, in: J. Barcelo (ed), Plenaries and Tutorials of EUROXV-INFORMS XXXIV Joint International Meeting, 7–31.
Zopounidis, C., and Doumpos, M. (1997a), “Preference disaggregation methodology in segmentation problems: The case of financial distress”, in: C. Zopounidis (ed.), New Operational Approaches for Financial Modelling, Springer-Verlag, Berlin-Heidelberg, 417–439.
Zopounidis, C., and Doumpos, M. (1997b), “Developing a multicriteria decision support system for financial classification problems: The FINCLAS system”, Optimization Methods and Software (in press).
Zopounidis, C., and Doumpos, M. (1998), “A multicriteria sorting methodology for financial classification problems”, Gestion 2000, Belgian Management Magazine: French-English (to appear).
Author information
Authors and Affiliations
Editor information
Editors and Affiliations
Rights and permissions
Copyright information
© 1998 Springer Science+Business Media Dordrecht
About this chapter
Cite this chapter
Zopounidis, C., Pardalos, P.M., Doumpos, M., Mavridou, T. (1998). Multicriteria Decision Aid in Credit Cards Assessment. In: Zopounidis, C., Pardalos, P.M. (eds) Managing in Uncertainty: Theory and Practice. Applied Optimization, vol 19. Springer, Boston, MA. https://doi.org/10.1007/978-1-4757-2845-3_12
Download citation
DOI: https://doi.org/10.1007/978-1-4757-2845-3_12
Publisher Name: Springer, Boston, MA
Print ISBN: 978-1-4419-4801-4
Online ISBN: 978-1-4757-2845-3
eBook Packages: Springer Book Archive