Date of Award

12-17-2014

Degree Type

Thesis

Degree Name

Master of Science (MS)

Department

Mathematics and Statistics

First Advisor

Gengsheng Qin

Second Advisor

Satish Nargundkar

Third Advisor

Xin Qi

Abstract

Customer targeting is the key to the success of bank telemarketing. To compare the flexible discriminant analysis and the logistic regression in customer targeting, a survey dataset from a Portuguese bank was used. For the flexible discriminant analysis model, the backward elimination of explanatory variables was used with several rounds of manual re-defining of dummy variables. For the logistic regression model, the automatic stepwise selection was performed to decide which explanatory variables should be left in the final model. Ten-fold stratified cross validation was performed to estimate the model parameters and accuracies. Although employing different sets of explanatory variables, the flexible discriminant analysis model and the logistic regression model show equally satisfactory performances in customer classification based on the areas under the receiver operating characteristic curves. Focusing on the predicted “right” customers, the logistic regression model shows slightly better classification and higher overall correct prediction rate.

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