Inductive learning for risk classification

The authors discuss the application of inductive learning to credit risk analysis. Three risk classification problems are addressed: business loan evaluation, bond rating, and bankruptcy prediction. The use of a system called Marble, a knowledge-based decision-support system that uses approximately 80 decision rules to evaluate commercial loans, is discussed. In particular, an aspect of Marble that uses inductive learning to classify financial risks is described, and the effectiveness of the technique is discussed.<>