Deep Dive: Modeling Customers Loan Default with Markov Chains

Sometimes machine learning is not the answer. Knowing the mechanisms of a system, we can construct models that answer certain quantitative questions more effectively. In this letter, we look at the customer loan payment process and model it with Markov Chains. This Deep Dive is part of the Data Science Fundamentals series. I once worked in a company that allowed to buy products with a credit.