Please use this identifier to cite or link to this item: http://hdl.handle.net/10397/34203
Title: Alternative approach to credit scoring by DEA : evaluating borrowers with respect to PFI projects
Authors: Cheng, EWL
Chiang, YH 
Tang, BS
Keywords: Construction
Credit scoring
Data envelopment analysis
Private finance initiative
Public/private partnership
Issue Date: 2007
Publisher: Pergamon Press
Source: Building and environment, 2007, v. 42, no. 4, p. 1752-1760 How to cite?
Journal: Building and environment 
Abstract: Private finance initiative (PFI), as a form of public/private partnership (PPP), helps to contract the private sector to governmental projects. In contrast to traditional public financed projects, PFI projects are procured by allowing a private sector entity to take the responsibility to design, build, finance, and operate (DBFO) an asset for a contract period of up to several decades. Moreover, banks are perceived to take the leading role in financing PFI projects. Since project financing involves credit assessment of loan applicants, banks have employed popular credit scoring models to assess their creditworthiness. Although the existing models are useful for credit scoring, new models have to emerge in response to ever-changing business practices. This paper therefore aims at introducing the application of data envelopment analysis (DEA) as an alternative credit-scoring model. Unlike traditional credit-scoring building on a formula where weights to a set of criteria are assigned subjectively, DEA will automatically generate the relative weights for analysis. However, incorporating DEA demands additional considerations, which are discussed in this paper. Finally, examples are demonstrated for illustrating this alterative approach to credit scoring by DEA.
URI: http://hdl.handle.net/10397/34203
ISSN: 0360-1323
EISSN: 1873-684X
DOI: 10.1016/j.buildenv.2006.02.012
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