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probability of default


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Hence, a rise in collateral value, following a policy rate cut, decreases the probability of default of agents, which banks will respond to by granting more loans. (2009) compute the probability of default for each loan and con- However, the probability of default and the default event to which it is related are eliminated in the traditional for- mula, since it is based on some unrealistic simplifications and assump- tions. Aside from the problem of data unavailability, the EDF is measured as a probability of default, in contrast to the DD, which is a quantile in the estimation of the proba- bility of default. The original concept of the Z-score issues from the probability of default definition, where the default event occurs when current

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