The dataset we are analyzing comes from a bank in Taiwan and contains information from April 2005 to September 2005. There is some interesting background to this data because Taiwan underwent a credit card crisis around the same time. The Taiwanese government allowed the formation of new banks in 1990. Within a couple of years of this, the banks turned to credit and cash cards to expand their businesses. The banks spent lots of money on advertising their credit cards mainly targeting young people. Requirement for credit card approvals were lowered so that even those without any income or any other means to pay back were able to acquire them. Moreover, the banks made it seem as if these credit cards could be consumed without any consequences thus attracting many customers. This careless and short-sighted act resulted in massive debts for many Taiwanese people. By February 2006, debts from credit card reached $268 billion and more than 500,000 people were not able to repay their loans thus becoming what came to be known as ”credit card slaves” (those who could only pay the minimum balance on their credit card debt every month). This issue resulted in significant societal problems including crime, violence, home- lessness and suicides. The suicide rate in Taiwan is the second highest in the world. The suicide rate in 2008 increased 22.9% compared to the rate in 2005, and the main reason is unemployment and credit card debt. The Taiwanese Finance Supervisory Commission took some strict counter measures to deal with these problems. Banks were ordered to modify their requirements for issuing credit cards such as rais- ing the income and job requirements, prohibiting improper credit card commercials, prohibiting inappropriate collection behaviors and prohibiting compound interest.
basanisruthi/Financial-Risk-analysis
The dataset we are analyzing comes from a bank in Taiwan and contains information from April 2005 to September 2005. There is some interesting background to this data because Taiwan underwent a credit card crisis around the same time.[1] The Taiwanese government allowed the formation of new banks in 1990. Within a couple of years of this, the banks turned to credit and cash cards to expand their businesses. The banks spent lots of money on advertising their credit cards mainly targeting young people. Requirement for credit card approvals were lowered so that even those without any income or any other means to pay back were able to acquire them. Moreover, the banks made it seem as if these credit cards could be consumed without any consequences thus attracting many customers. This careless and short-sighted act resulted in massive debts for many Taiwanese people. By February 2006, debts from credit card reached $268 billion and more than 500,000 people were not able to repay their loans thus becoming what came to be known as ”credit card slaves” (those who could only pay the minimum balance on their credit card debt every month). This issue resulted in significant societal problems including crime, violence, home- lessness and suicides. The suicide rate in Taiwan is the second highest in the world. 2 The suicide rate in 2008 increased 22.9% compared to the rate in 2005, and the main reason is unemployment and credit card debt. The Taiwanese Finance Supervisory Commission took some strict counter measures to deal with these problems. Banks were ordered to modify their requirements for issuing credit cards such as rais- ing the income and job requirements, prohibiting improper credit card commercials, prohibiting inappropriate collection behaviors and prohibiting compound interest.
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