Let me explain more specifically about what I want from R.
It is about estimating bad debt related to people's credit card payment behavior.
Here we go!
Status of a credit account {NC, 0,1,2,�.M} where NC is no-credit status(account has no balance), 0 is where the account has a credit balance but the payment are up to date, 1 is where the account is one payment overdue, and M payment overdue is classified as default.
So we come up with Transition matrix stating probabilities of each state
FromTo NC 0 1 2 3 NC 0.79 0.21 0 0 0 0 0.09 0.73 0.18 0 0 1 0.09 0.51 0 0.40 0 2 0.09 0.38 0 0 0.55 3 0.06 0.32 0 0 0.62
Thus if one starts with all the accounts having no credit �0 =(1,0,0,0,0), after one period the distribution of account is �1=(0.79, 0.21, 0, 0, 0) after subsequent periods, it becomes
�2=(0.64, 0.32, 0.04, 0, 0), �3= (0.540, 0.387, 0.058, 0.015, 0) �4=(0.468,0.431, 0.070, 0.023, 0.008) �5=(0.417, 0.460, 0.077, 0.028, 0.018) and ++++ �10=(0.315, 0.512, 0.091, 0.036, 0.046)
This proves a way for estimating the amount of bad debt will appear the future periods. After 10 periods, it estimates that 4.6%(0.046) of the accounts will be bad.
I am sure R can solve this, please help me!
Maria Gu 510-418-1240
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