MANAGEMENT

PROJECT - PROPOSAL
APPLICATION OF ANALYTICAL TECHNIQUES FOR LOAN PREDICTION

Kartik Mehta

7/25/16

MANAGEMENT PROJECT

Contents
Description of the Project ............................................................................................................. 2
Predictive Modelling in Finance Sector ............................................................................. 2
Introduction .......................................................................................................................................... 3
Overview of Global Analytics Market ................................................................................. 3
Need for Predictive Modelling ................................................................................................ 3
About the Project ........................................................................................................................... 3
Primary Objective of Research .................................................................................................. 4
Proposed Methodology ................................................................................................................... 5
Variables in the Data Set (as provided by Analytics Vidya) ................................. 5
Managerial Implications ................................................................................................................ 6
Limitations of the study ................................................................................................................. 7
References.............................................................................................................................................. 8

Description of the Project

Predictive Modelling in Finance Sector
Company wants to automate the loan eligibility process (real time) based on customer
detail provided while filling online application form. These details are Gender, Marital
Status, Education, Number of Dependents, Income, Loan Amount, Credit History and
others. To automate this process, they have given a problem to identify the customers
segments, those are eligible for loan amount so that they can specifically target these
customers.

Introduction
Overview of Global Analytics Market
Analytics market and need are on a rise. Managers no longer depend on their
intuition but rather depend on data backed or supported decisions. Global BI, CPM
and Analytics applications / performance management software revenues is worth
US $ 13 Billion in 2012, a 6.8% rise from 2011. Scope of analytics products has
been evolving rapidly and far beyond conventional reporting based on data
extracted from core enterprise applications like ERP and CRM.The Global Analytics
Market is worth US$ 13 Billion.

Need for Predictive Modelling

Predictive analytics has come of age as a core enterprise practice necessary to
sustain competitive advantage. This technology enacts a wholly new phase of
enterprise evolution by applying organizational learning, which empowers the
business to grow by deploying a unique form of data-driven risk management
across multiple fronts
The objective of predictive modelling is to help to manage data and provide
insightful results. These insightful results can help the data owner to make
statistical based decisions and have data to support the decisions rather than take
decisions simply based on intuition.
We need predictive modelling for the purpose to compete as data insights will help
us secure a powerful and unique competitive stronghold which shall help companies
to grow and enforce business integrity. Slashing costs is also an added advantage
of predictive modelling. For instance, it can help company decrease campaign
spend by identifying respondents.

About the Project

For this project we have considered data set from data competition. A data
competition provides a real time business problem and provides segregated data.
The data is segregated into Training Data set and Test Data set. We use our
analytical tools and techniques on training data set and use the results obtained
and apply it on test data set to measure the robustness of the model. Series of
techniques are used to make the model and we select the model which has the
least errors or residuals and which provides good degree of accuracy.
The considered data set is a Loan Prediction Problem. The problem is to predict
with certain degree of accuracy coupled with least number of residuals or errors if
the next person is eligible to receive a loan or not. The data will be cleaned and
analyzed using analytical tools. The preferred tools are SAS, XL Miner, Tableau.

Primary Objective of Research

Our objective is to understand the following:
1. Understand the data and learn the application of data manipulation techniques to
prepare data for modelling.
2. Learn, identify and apply the modelling techniques which helps us to identify the best
model.

Proposed Methodology
Empirical / Qualitative

Empirical

Data collection method

As provided by data competition

Sample size

As provided in the data by data

competition

Respondents

As provided by data by data

competition

Statistical techniques to be used

Logistic Regression, Decision Tree,

Neural Networks

Variables in the Data Set (as provided by Analytics Vidya)

Variable
Loan_ID
Gender
Married
Dependents
Education
Self_Employed
ApplicantIncome
CoapplicantIncome
LoanAmount
Loan_Amount_Term
Credit_History
Property_Area
Loan_Status

Description
Unique Loan ID
Male/ Female
Applicant married (Y/N)
Number of dependents
Applicant Education (Graduate/ Under Graduate)
Self-employed (Y/N)
Applicant income
Coapplicant income
Loan amount in thousands
Term of loan in months
credit history meets guidelines
Urban/ Semi Urban/ Rural
Loan approved (Y/N)

Managerial Implications
The idea of the project is to help corporates manage their data and bring out
meaningful insights. The predictive modelling will help the company to automate the
loan eligibility process and get insightful information of their customers thus making it
easy for the company to identify which factor plays an important role in deciding the
eligibility of the customer for the loan.

Limitations of the study

The limitation of the project is:
Limited to no interaction with the client thus limiting our access or need for further
or new variable data.

References
1. Anon., 2016. NASSCOM. [Online]
Available at: http://www.nasscom.in/india-%E2%80%93-hub-analytics-products-analyticsproduct-excellence-matrix
[Accessed 18 July 2016].
2. Anon., n.d. Analytics Vidhya. [Online]
Available at: http://datahack.analyticsvidhya.com/contest/practice-problem-loan-prediction-iii
[Accessed 18 July 2016].