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Selecting The "Best" Prediction Model: An Application To Agricultural Cooperatives

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  • Rambaldi, Alicia N.
  • Zapata, Hector O.
  • Christy, Ralph D.

Abstract

A credit scoring function incorporating statistical selection criteria was proposed to evaluate the credit worthiness of agricultural cooperative loans in the Fifth Farm Credit District. In-sample (1981-1986) and out-of-sample (1988) prediction performance of the selected models were evaluated using rank transformation discriminant analysis, logit, and probit. Results indicate superior out-of-sample performance for the management oriented approach relative to classification of unacceptable loans, and poor performance of the rank transformation in out-of-sample prediction.

Suggested Citation

  • Rambaldi, Alicia N. & Zapata, Hector O. & Christy, Ralph D., 1992. "Selecting The "Best" Prediction Model: An Application To Agricultural Cooperatives," Southern Journal of Agricultural Economics, Southern Agricultural Economics Association, vol. 24(1), pages 1-7, July.
    • Handle: RePEc:ags:sojoae:30380
    DOI: 10.22004/ag.econ.30380
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    1. Johnson, R. Bruce & Hagan, Albert R., 1973. "Agricultural Loan Evaluation with Discriminant Analysis," Journal of Agricultural and Applied Economics, Cambridge University Press, vol. 5(2), pages 57-62, December.
    2. Fischer, Martin L. & Moore, Karen, 1986. "An Improved Credit Scoring Function For The St. Paul Bank For Cooperatives," 1986 Regional Committee NC-161, October 7-8, 1986, St. Paul, Minnesota 127224, Regional Research Committee NC-1014: Agricultural and Rural Finance Markets in Transition.
    3. Johnson, R. Bruce & Hagan, Albert R., 1973. "Agricultural Loan Evaluation With Discriminant Analysis," Southern Journal of Agricultural Economics, Southern Agricultural Economics Association, vol. 5(2), pages 1-6, December.
    4. Fischer, Martin L. & Moore, Karen, 1986. "An Improved Credit Scoring Function for the St. Paul Bank for Cooperatives," Journal of Agricultural Cooperation, National Council of Farmer Cooperatives, vol. 1, pages 1-11.
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    6. Collins, Robert A. & Green, Richard D., 1982. "Statistical methods for bankruptcy forecasting," Journal of Economics and Business, Elsevier, vol. 34(4), pages 349-354.
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