Python for Finance Cookbook

Identifying Credit Default with Machine Learning

In recent years, we have witnessed machine learning gaining more and more popularity in solving traditional business problems. Every so often, a new algorithm is published, beating the current state of the art. It is only natural for businesses (in all industries) to try to leverage the incredible powers of machine learning in their core functionalities.

Before specifying a problem, we provide a brief introduction to the field of machine learning. Machine learning can be broken down into two main areas: supervised learning and unsupervised learning. In the former, we have a target variable (label), which we try to predict as accurately as possible. In the latter, there is no target, and we ...