Credit-scoring models for the evaluation of small-business loan applications

Received on 1 May 1991. Revision received 1 January 1991. In this paper, the decision process of commercial loan officersis modelled. Specifically, commercial loan applications froma major Canadian bank were analysed. Creditscoring models usingdiscriminant analysis and logit regression were created in aneffort to replicate the decision process. Results indicate thatcredit-scoring models for small-business loans are effectiveand that further analysis in this area is warranted.