Discriminant Analysis

Discriminant Analysis

Suppose you are a consultant hired by a bank to predict whether a small business will default on a loan given 1) the number of days a small business is delinquent on a loan and 2) the number of months a small business has been doing business with the bank.

Before using linear discriminant analysis to classify whether a small business will default, please 1) test the assumptions surrounding linear discriminant analysis, 2) use the unstandardized linear discriminant function coefficients to solve for the discriminant function score, and 3) assess classification accuracy.  Note: You do not have to implement validation procedures discussed in our video.  Finally, use the “da_default_data.XLS” attached to obtain, examine, and interpret results.