Question 33
A fintech company wants to assess the performance of its classification model, which predicts loan approval (positive class) or rejection (negative class). Table 3 presents the data used for model development, while Table 4 provides the estimated coefficients from the logistic regression model. To validate the model, the actual loan decisions made by the fintech company are shown in Table 5.
| Cust_id | Salary | Age |
|---|---|---|
| 1 | 60 | 30 |
| 2 | 9 | 35 |
| 3 | 8 | 40 |
| 4 | 16 | 25 |
| 5 | 15 | 50 |
| 6 | 50 | 21 |
Table 3: Data used for Building a Logistic Regression Model
| Threshold | 0.35 |
|---|---|
| b0 | 0.03 |
| b1 | 0.04 |
| b2 | -0.03 |
Table 4: Estimated Coefficients from Logistic Regression
| Y_act |
|---|
| 1 |
| 1 |
| 0 |
| 0 |
| 0 |
| 0 |
Table 5: The actual loan decisions
Based on the provided data, answer the given sub-questions
What is the correct interpretation of the coefficient b2? (Choose that is/are applicable)
If the age increases by 1 unit, the log of odds of the application acceptance decreases by 0.03.
If the age increases by 1 unit, the odds of the application getting accepted decrease by 3% (e^(-0.03) = 0.97).
None of these