BUSINESS SITUATION CONSIDERING

USING LOGISTIC REGRESSION

BY GROUP-4
 Logistic Regression

• Method of choice when the dependent variable is binary and

assumes only two discrete values
• By inputting values for the predictor variables for each new
customer – the logistic model will yield a predicted probability
• Customers with high ‘predicted probabilities’ may be chosen to
receive an offer since they seem more likely to respond positively
 EXAMPLE: Credit Card Offering

• Dependent Variable - whether the customer signed up for a gold card

offer
• Predictor Variables - other bank services the customer used plus financial
and demographic customer information
• By inputting values for the predictor variables for each new customer, the
logistic model will yield a predicted probability
• Customers with high ‘predicted probabilities’ may be chosen to receive
the offer since they seem more likely to respond positively
Credit Score Modelling

• It can be seen that the most predictive variables

are net cash flow, client's business experience
and total debt ratio. Looking at the regression
coefficient shows that the odds of the company
of being bad are increasing with the increase of
total debt ratio.
• On the contrary, odds of the company of being
good increases with the increase of the net cash
flow