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The reasons why evaluation of confusion matrix such as Accuracy cannot be used in binary classification
The characteristic such as Accuracy are often used to evaluate the accuracy of the machine learning, but this is not the case in the financial sector. Before explaining the reasons why it is not used in the financial sector, let me explain about the evaluation index including confusion matrix. For those who are familiar with the terms, please skip to “Problems” and “Conclusion”. Confusion matrix Confusion matrix is a summary of the prediction and its results in a matrix format. In the case of binary classification in the machine learning, the predicted probability and its predicted clarification will be the output. For example, the ratio of becoming delinquent and not […]
Evaluation of Prediction Models – Logarithmic Loss –
Introduction We would like to talk about logarithmic loss, or simply log loss this time. Similarly to Gini coefficient, log loss is one of the popular indexes used for determination in model development using machine learning. Though the calculation method is rather complicated compared to Gini coefficient, it would be sufficient if you could understand the meaning of the values as the actual calculation will be done by the machine. Let us begin with an explanation about what log loss is. What is “Log Loss”? Log loss is to quantify a gap between the predicted probability and its result using the cross entropy. The cross entropy is defined based on […]
Predictive model evaluation -Gini Coefficient-
introduction It is said that the model which is made by AI often becomes black boxes, but nowadays they are changing to a more descriptive form. WKWK also has a white box model that users can understand.So how a risk model should be evaluated by when machine learning? In the case of credit scores, one of the representative indicators is the Gini Coefficient. In general consumer finance, the value varies greatly depending on the business model, such as 30% to 80%. It becomes one of the substantial reasons to say it is a credible model when the values are higher.Let us explain what the Gini coefficient is. What is Gini […]