Fuzzy logic based loan evaluation system

Retail loans play a key role in the banking of many countries. At the same time loans to individuals are regarded as more risky than business loans. For these reasons, the efficiency of retail credit granting is important for the welfare of both households and of banking system. In this paper a fuzzy logic model for retail loan evaluation is proposed. The fuzzy model consists of five input variables such as "income", "credit history", "employment", "character", and "collateral condition" and single output variable which indicates credit standing. Whether applicant's credit standing shall be regarded as "low", "medium" or "high" depends on the degree of membership for the linguistic terms of fuzzy output. (C) 2016 The Authors. Published by Elsevier B.V.