Credit Scoring Models In Our Small Business Loan Applications

So far, the small enterprise has been a highly important part in the national economy. However, financing difficulty has restrained the development of small companies for a long period of time. The main reason for financing difficulty is that the bank is suspicious of small business credit and will not supply capital. Thus, the key to solve the problem is fulfilling credit evaluation efficiently. This paper will analyze the feasibility of establishing credit scoring model for China's small business after comparing several credit rating methods, and then carry out empirical analysis based on logistic regression. It will be meaningful to solve the small enterprise financing problem.SectionⅠanalyzes the reason for small business financing difficulty from the aspects of small enterprise itself and financial market and points out the key to solve the problem is to fulfill credit evaluation efficiently.SectionⅡcompares expert system,credit scoring and credit risk measurement model such as CreditMetrics,KMV and so on. Credit scoring is thought to be the most applicable in small business credit evaluation and risk control.SectionⅢfirstly concludes the reasons and qualifications of using credit scoring in small enterprise based on the successful case in American banking system and analyzes the feasibility of building credit scoring model in China's small business from the angle of supervision sector, bank and social credit system.,SectionⅣselects the target variables by factor analyzing and establishes small business credit scoring model based on logistic regression. Finally, it tests the predicting effect using Expectation-Prediction Table.Sectionⅴconcludes the disadvantages of credit scoring and point out the aspects which should be paid great attention to in practical application, such as adjusting the model dynamically, carrying out both quantitative analysis and qualitative analysis and so on.