FUZZY LOGIC BASED TOOL FOR LOAN RISK PREDICTION
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Date
2014
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Apeejay Journal of Computer Science Applications Vol. 2
Abstract
Loan risk is a major decision for any financial organization like banks or for decision maker for loan applicant. The
uncertain domain of risk assessment has long been in need of a reliable and consistent system to help simplify the
decision making process. Fuzzy Logic provides a completely different, unorthodox way to approach a control
problem. This method focuses on what the system should do rather than trying to understand how it works. One can
concentrate on solving the problem rather than trying to model the system mathematically, if that is even possible.
This almost invariably leads to quicker, cheaper solutions. This research work will help in analysis risk for a loan
applicant according to different factors like its job, salary, loan amount and loan period etc. the decision factor helps
in making decision about how to select correct loan applicant. Using fuzzy logic decision variable has been defined,
new rules defined, according to different rules added and takes average decision based on questionnaires filled by
different categories of applicant’s. The analysis of case studies shows the consistency and effectiveness of the
approach in making correct decision.