Overview
The first step in analyzing the bank portfolio is to obtain a dataset that represents the assets in the banks portfolio. Each loan record should have the following pieces of information
- Type - indicates the type of loan. In this case, we consider only loans that are bullet loans or amortized.
- Issue Date - indicates when the loan is issued
- Years and Periods - indicates the length of the loan in years and the number of periods per year. For simplicity, we only consider loans with integer number of years, that is, we have not loans that have lengths that are fractions of years.
- Principal - the amount of the loan
- Score - this is a score that is assigned to each loan by the banker based on its credit worthiness. Here we have only three scores: 1,2,3, where 1 is the best and 3 represents the riskiest.
Portfolio Dataset
The following is a copy of the portfolio dataset that is used in this example.
Next Step
The next step is obtain a dataset that contains monthly snapshots of the banks loan portfolio, including
a flag that indicates if a loan has defaulted.