https://365datascience.com/dwqa-answer/answer-for-credit-risk-modelling-3/ -
Hi Phanindra,
Great question!
Normally in data science, we would not want to do that. As you are probably assuming, the accuracy would be much higher if we could simply use continuous variables.
However, due to regulation (namely from Basel II) we must include only categorical variables in a PD model so that it is easy to interpret.
Best,
Iliya
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