Author(s)

Zhigang Chen, Yan Li, Hehua Li

Corresponding Author

Zhigang Chen

Abstract

Inventory financing was growing largely in the past years. Its credit risk management is important for the commercial banks. The rule induction by rough set analysis is an effective tools for credit managers to evaluate the risk of bank loan. However, the criteria for risk management can be divided into two categories. One is the criteria based on borrower's own operation and financial status, which is considered as inputs in data envelop analysis(DEA). The other is the criteria related to the credit management or other relevant actions of lender, which is considered as outputs. This article proposed a methodology which combined data envelop analysis(DEA) and rough set theory to induce the decision rules of credit management in inventory financing. These methodology can help credit risk managers making the decisions in evaluating the default risk of bank loan in inventory financing.

Keywords

DEA, Rule Induction, Rough Set Theory, Inventory Financing, Credit Risk.