ymcmr-logo-new Beta

Invisible Leadership for Success in Business

Grier Lin

Professor and President, International Leadership Institute Australia E-Mail: grier.lin@ili.edu.au

ABSTRACT
The new organisations are dispersed. Workers are employed in many different offices and locations, wear different hats, and do not necessarily owe all their loyalty to one organisation. No longer does everyone have to be in the same place at the same time to get the work done. They do not even need to be on the payroll. Today’s organisation is typically a 20/80 place, with only 20 percent of the people involved being employed full time by the organisation. The others are suppliers or contractors, part-timers or self-employed professionals. A virtual organisation is one that you do not necessarily see, certainly not all together in one place, but that nevertheless delivers the goods. Virtuality means managing people you can not see and cannot control in any detail. This kind of management by remote control can only work when trust goes in both directions. For a virtual organisation to succeed, it will have to be led by invisible leaders who must possess unique mix of attributes. This paper presents the special attributes required by an invisible leader for leading the organisation of the future to success.

Securitization and the Subprime Mortgage Crisis of 2008

Chao-Hui Yeh

Associate Professor of Department of Business Administration, I-Shou University , Taiwan, R.O.C E-Mail: CHY@ius.edu.t

Keywords: Securitization, Subprime Mortgage Crisis

ABSTRACT
This article provides a review of the securitization instruments in the context of the subprime mortgage crisis of 2008. The decreasing housing prices in the U.S. caused the increasing mortgage defaults and the increasing mortgage defaults caused this subprime mortgage crisis and this crisis is exploded by securitization instruments (e.g., CDS) which are just too complex to see their risks. This article will provide a specific classification of securitization instruments and distinguishes between two main classes of securitization instruments. The first classes are mortgage-backed security (MBS), asset-backed security (ABS), asset-backed commercial paper (ABCP) and cash-flow collateralized debt obligation (CDO).The second category of securitization instruments includes credit default swap (CDS) and synthetic collateralized debt obligation (synthetic CDO). Finally, this article ends with a short discussion of the roles of the credit rating agency (CRA) in the financial crisis.

Tourism Motivation as an Effective Platform for Improved Mice Segmentation Marketing Strategies for Taiwan

Che-Chao Chiang

PhD Candidate, School of Hospitality, Tourism and Marketing, Victoria University, Melbourne, Australia E-Mail: chechao.chiang@live.vu.edu.au

Fu-Ming Chiang

Professor and Dean of the Informatics and Management School, Tajen University Taiwan

Riccardo Natoli

PhD, Victoria University, Melbourne, Australia

Keywords: tourism motivations • market segmentation • factor-cluster method • MICE tourism

ABSTRACT
Market segmentation is frequently recommended as a powerful tool to examine systematic differences of specific determinant factors across a number of segments (Dolnicar and Grün, 2008; Dolnicar, 2004; Baloglu and McCleary, 1999; Richard and Sundaram, 1994). An improved understanding of these differences enabled this paper to identify three key segments pertaining to the Taiwan MICE sector. This improved foundation assisted in the development of efficient strategies for Taiwan marketers to ascertain fresh potential markets as well as to sustain a repeat customer base. This paper utilised this technique, focusing on tourism motivation and its potential impact on marketing strategies in the case of the MICE sector in Taiwan. The paper employed the following analyses: exploratory factor analysis, K-means clustering and ANOVA to identify three different segments (career-enhancement seekers; value maximisation seekers; and education-travel seekers) among MICE attendees in the Taiwan business context. The results are subsequently used to develop prospective marketing strategies for the Taiwan MICE sector.

The Interaction Effect of Firm and Industry Characteristics, Economic Conditions on Corporate Debt Financing: Evidence from Taiwan

Hsien-Hung Yeh*

Wen-Ying Cheng

Lecturer and Associate Professor, Department of Business Administration, National Pingtung University of Science and Technology, Taiwan, R.O.C *Corresponding author. The authors are grateful for the helpful comments and suggestions from Associate Professor John Forster, Griffith University, Australia and Assistant Professor Henry Hsieh, National Pingtung University of Science and Technology, Taiwan. E-Mail: hhyeh@mail.npust.edu.tw

Keywords: Firm Characteristics, Industry Characteristics, Economic Conditions, Interaction Effect, Corporate Debt Financing.

ABSTRACT
This paper includes consideration of economic conditions to investigate the effects of interactions between firm characteristics, industry characteristics and economic conditions on corporate debt financing, which is ignored or only examined partly rather than fully integrated by previous studies. The findings indicate that industry characteristics and economic conditions have no significant effect on corporate debt financing. The effects of some firm characteristics on corporate debt financing are influenced by the impact of industry characteristics and economic conditions. However, we find no significant effect of interaction between industry characteristics and economic conditions on corporate debt financing.

An Exploratory Study of the Earning Growth Curve in Online Auction－Taking the Female Attire And the Clothing Fitting as an Example

Wen-Ying Cheng

Yu-Hsin Chen

Associate Professor and Graduate Student of Department of Business Administration. National Ping Tung University of Science and Technology, Taiwan, R.O.C E-Mail: natty@mail.npust.edu.tw m9658027@mail.npust.edu.tw

Keywords: Online Auctions, Growth Curve of Gross Income, Operational Scale

ABSTRACT
The main purpose of this paper was to discuss the earning change in different operational scale in online auction of female attire and clothing fitting. The results verified that the gross income and profitability of small-scale firms are in the state of instability, but being in the state of stability and keeping continuous growth under larger scale firms. Furthermore, the gross income and profitability of female attire and clothing fitting in different operational scales were significant difference. It clearly showed that the scale of Online Auctions influences the gross income and profitability. From the estimation of data curve, based on monthly calculation, the positive value of growth rate coefficient b has demonstrated that the gross income and profitability of merchandise category of female attire and clothing fitting have a positive tendency of continuous growth. In addition, the estimate of b (1.6) has fully shown that the growth rate of this period is times of the previous period. Thus, this research provides very useful and valuable information to help those firms or persons that will undertake Online Auctions to evaluate the capital financing and pre-assess the break-even balance.

Risk Factors of Personal Injury Liability Insurance: a Case Study of “T” Non-Life Insurance Company in Taiwan

Pai-Lung Chou

Associate professor, Department of Risk Management and Insurance, National Kaohsiung First University of Science and Technology,,Taiwan, R. O. C. E-Mail: plchou@ccms.nkfust.edu.tw

Jen-Wen Sheu

Ph. D. candidate , Institute of Management, National Kaohsiung First University of Science and Technology,Taiwan, R. O. C.

Chen-Hua Yao

Doctoral Student, Institute of Management, National Kaohsiung First University of Science and Technology,Taiwan, R. O. C.

Keywords: Non-life insurance company, Injury insurance, Logistic regression.

ABSTRACT
Insurance companies have started selling injury insurance and related merchandise recently. There are great differences between these products and traditional insurance policies. In order to ensure operational performance and to enhance profitability, it is necessary to carry out analysis and filtering. This paper explores sampling data of personal injury and liability insurance policies from a well-known insurance company, and attempts to establishes a model through use of this evidence resulting in a lower probability of high insurance liabilities, specifically. If these research findings can be effectively analyzed, the results will contribute to process refinement of claims and underwriting; greater customer satisfaction, sustainable enterprise development and promotion of social and public welfare.

Using Financial Factors to Investigate Productivity– An Empirical Study in Taiwan

Shu-Yi Liaw

Chih-Ying Tai

Associate Professor and graduate student, Department of Business Administration National Ping Tung University of Science and Technology, 912, Ping Tung, TAIWAN E-Mail: syliaw@mail.npust.edu.tw

Keywords: Productivity, Financial factor, Factor analysis, Fuzzy clustering analysis

ABSTRACT
In terms of financial ratios, a firm’s management performance can be evaluated; to use financial factors to efficient management is proposed as the key element for upgrading a firm’s productivity. This study investigates productivity in terms of certain financial factors of large-scale manufacturing firms in Taiwan. We first determine several influential financial factors using factor analysis. Based on these factors, fuzzy clustering approaches are then employed to categorize the manufacturing firms into several patterns with distinct characteristics of financial factors. Using the characteristics of productivity and financial factors for each pattern, pattern analysis is made, and some suggestions to improve the firms’ productivity are proposed.

The Expansion of Taiwanese Residential Construction in the 2000s: A Supply Led or Demand Pull Expansion

Henry H. Y. Hsieh

Assistant professor, Department of Business Administration National Ping Tung University of Science and Technology, Taiwan, R.O.C E-Mail: henry@npust.edu.tw

John Forster

Professor, Department of Accounting, Finance and Economic, Griffith University, Brisbane, Australia. E-Mail: j.forster@griffith.edu.au

Keywords: Residential construction, Supply led expansion, Demand led expansion, Oversupply, Asymmetric market information

ABSTRACT
Residential construction growth in the 2000s shows no significant evidence whether the boom is triggered by demand or supply side according to pooled cross-sectional time-series by 23 Cities and Counties in the period of 1999-2005 and Joint test of these two sides. This differs significantly from the supply led expansion in the 1990s. During the 2000s demand side plays more important role than before such as larger average residential unit size, housing price growth, and increasing housing loans. This can be seen from escalating approval, completion, number of developer and high vacancies. Transparent information by releasing market information can ameliorate group irrationality derived from rational individual decision. Although demand factors yield significant influence to residential construction in the 2000s, fast construction, subcontracting practices, fast expansion of residential construction are still similar to those in the 1990s.

The Competitiveness of Semiconductor Corporations in China from Institution Theory and Resource-Based Theory: Case Study of Smic and Tsmc

Mu Hua Chen

Xin-Min Tian

Ph D. student and Professor of Antai College of Economics and Management Shanghai Jiao Tong University, China E-Mail: kay@mail.goodnet.com.tw

Wan-Chiang Chen

Bih-Shiaw Jaw

Ph D. student and Professor of HRM Institute National Sun Yat-Sen University, Taiwan E-Mail: bsjaw510@mail.nsysu.edu.tw

Keywords: Institutional Theory, Resource-Based Theory, Chinese High-Tech Industry, HRM.

ABSTRACT
Chinese government has actively issued many preferential policies to encourage the development of high-tech industry in China. The present case study visits two semiconductor corporations operating in China and discusses their competitiveness from institutional theory and resource-based view.

Does the Leadership Style Influence Employee’s Organizational Trust? – The Mediating Effect of Leader-Member Exchange

Yuan-Duen Lee

Prof. & Dean of the College of Management, Chang Jung Christian University, Taiwan, R.O.C E-Mail: ydlee@mail.cjcu.edu

Shih-Hao Chen

Wen-Yu Chiu

Doctoral Student of Graduate School of Business and Operations Management, Chang Jung Christian University E-Mail: shihhao_chen@yahoo.com.tw christineandjane@hotmail.com

Pei-Wen Chao

Lecturer, General Education Center, Chang Jung Christian University E-Mail: andyotello@gmail.com

Keywords: Servant leadership, LMX, Employee’s Organizational Trust, Service Industry in Taiwan.

ABSTRACT
According to the Directorate-General of Budget, Accounting and Statistics, the service industry is now the focus of economic and social development in Taiwan. Therefore, it is necessary to explore how the leaders and managers in service industry firms operate and seek to develop the competitive advantages of their companies. A review of the literature shows that few scholars have undertaken research on servant leadership, LMX and employee’s organizational trust. Consequently, a localized measuring scale was well developed in this study in order to explore the relationship among these three variables in Taiwan. This study developed the measuring scale of servant leadership through an analysis of the literature and expert consultations, and the fuzzy Delphi method, analytic hierarchy process (AHP) and confirmatory factor analysis (CFA) were adopted to construct and verify the validity of the measuring scale. A total of 2,000 questionnaires were distributed to employees of service industry firms in Taiwan, and 311 valid questionnaires were returned. Reliability, Pearson correlation, and SEM were conducted to test the hypotheses presented in this research. The results show that there are significant and positive correlations among dimensions of servant leadership, LMX and employee’s organizational trust, and LMX has mediation effect on the relationship between servant leadership and employee’s organizational trust. This study discusses the conclusions and implications and this research, and then offers some suggestions for management practitioners and directions for future research.

STRATEGY PARADOX AND INTEGRATED MODEL OF STRATEGIC MANAGEMENT

Tsai, Chan-Wei

Assistant Professor of Department of Business Administration National Pingtung University of Science and Technology, Taiwan, R.O.C E-Mail: tsaidaniel@mail.npust.edu.tw

Keywords: Strategy Paradox; Strategic Selection; Strategic Change

ABSTRACT
This article propounds a framework for classifying Strategic Management according to two dimensions; Content vs. Process, and Environment vs. Organization. Strategic Management can be thus partitioned into four approaches―The Planning Approach, The Positioning Approach, The Emergent Approach, The Resource Approach. First, we discuss the typical theories of each approach, and find their problems and characteristics. Secondly, we use an integrated model of organizational theory to explain the relationship between four approaches and find the strategy Paradox out. Finally, we propound an Integrated Model from two options-Strategy Selection and Strategic Change.

A Study of Grey Theory on Improving the Investment Performance of Technical Analysis Index —An Example of the Shenzhen Index’s Component Stocks

Alex Kung-Hsiung Chang

Professor Dep. Of Business Administration, National Pingtung University of Science and Technology 1 Hsefu Rd. Neipu Pingtung, Taiwan 912 E-Mail: bear419@mail.npust.edu.tw

Kuei-Yi, Lin

Director of Accounting, Neipu Junior High School, Pingtung Taiwan 912

Keywords: GM (1, 1), Shenzhen Stocks Market, Technical Analysis, RSI, BIAS, KD, WMS%R.

ABSTRACT
Using the daily, weekly and monthly data of the Shenzhen Index’s Component Stocks from January 2000 to May 2007 as examples, this paper try to improve the investment performance of technical analysis indices in China stocks market. First of all, this paper whitens original data through a grey model GM (1,1), and grey technical analysis indices are obtained. We use traditional technical analysis indices like RSI, BIAS, KD, and WMS%R as agency indices; compare the investment performance between original and grey technical analysis indices. Based on the empirical results, we find: Eight of twelve technical analysis indexes can improve the performance of investment over 50% than original ones. Especially daily-KD and daily-RSI can improve the performance of investment over 60%. Obviously the results find that the performance of investment of post-GM(1,1) treatment were better than those of pre-GM(1,1) treatment. And the investors can use the grey technical analysis indexes to obtain higher investment returns in Shenzhen Stocks Market. But due to the pre and post-GM(1,1) treatment of technical analysis can’t obtain extra profit than buy and hold strategy(BHS) , the weak-form market hypothesis in Shenzhen stocks market could not be rejected

A Study of Grey Theory on Improving the Investment Performance of Technical Analysis Index —An Example of the Dow Jones Industry Index’s Component Stocks

Alex Kung-Hsiung Chang

Professor Dep. Of Business Administration, National Pingtung University of Science and Technology 1 Hsefu Rd. Neipu Pingtung, Taiwan 912 E-Mail: bear419@mail.npust.edu.tw

Jui-Lin, Hsu

Testing Manufacturing Dept.,Walton Advanced Engineering Inc., Kaohsiung Taiwan 806

Keywords: GM (1, 1), Dow Jones Industry Index, Technical Analysis, KD, RSI, BIAS, WMS%R.

ABSTRACT
Using the daily, weekly and monthly data of the Dow Jones Industry Index’s Component Stocks from January 1997 to September 2007 as examples, this paper try to improve the investment performance of technical analysis indices in New York Stocks Exchange Market. First of all, this paper whitens original data through a grey model GM (1,1), and grey technical analysis indices are obtained. We use traditional technical analysis indices like RSI, BIAS, KD, and WMS%R as agency indices; compare the investment performance between original and grey technical analysis indices. Based on the empirical results, we find: Nine of twelve technical analysis indexes can improve the performance of investment over 60% than original ones. Especially daily-KD, daily-RSI, and daily-WMS%R can improve the performance of investment over 70%. Obviously the results find that the performance of investment of post-GM(1,1) treatment were better than those of pre-GM(1,1) treatment. And investors can use the grey technical analysis indexes to obtain higher investment returns in New York Stocks Exchange Market. But due to the pre and post-GM(1,1) treatment of technical analysis can’t obtain extra profit than buy and hold strategy(BHS) , the weak-form market hypothesis in New York Stocks Exchange Market could not be rejected.

Implementing Option Pricing Models when Asset Returns Follow an Autoregressive Moving Average Process

Chou-Wen Wang

Associate Professor, Department of Risk Management and Insurance, National Kaohsiung First University of Science and Technology, Taiwan E-Mail: chouwen1@ccms.nkfust.edu.tw

Chin-Wen Wu

Assistant Professor, Department of Finance & Institute of Financial Management, Nanhua University, Taiwan E-Mail: chinwenwu813@gmail.com

ABSTRACT
Motivated by the empirical findings that asset returns or volatilities are predictable, this paper studies the pricing of European options on stock or volatility, the instantaneous changes of which depend upon an autoregressive moving average (ARMA) process. An ARMA process transforms to an MA process with new MA orders which depends on the observed time span under a risk-neutral probability measure. The pricing formula of an ARMA-type option is similar to that of Black and Scholes, except that the total volatility input depends upon the AR and MA parameters. Based on the results of numerical analyses, the option values are increasing functions of the levels of AR or MA parameters for all moneyness levels. Specifically, the AR effect is more significant than the MA effect.

Are World Socially Responsible Investment Markets Integrated?

Eduardo D. Roca

Associate Professor in Department of Accounting, Finance and Economics

Victor S.H. Wong

PhD Scholar in Department of Accounting, Finance and Economics E-Mail: V.Wong@griffith.edu.au

Gurudeo A. Tularam

Lecturer in Faculty of Science, Environment, Engineering and Technology Griffith University, 170 Kessels Road, Nathan, QLD 4111, Australia

Keywords: Socially responsible investment, integration, vector autoregression, international diversification

ABSTRACT
A growing number of SRI funds invest across different SRI markets worldwide. Are SRI markets worldwide therefore becoming integrated? This issue is highly important since greater integration between SRI markets implies lower benefits from international diversification and higher contagion risks between SRI markets. This paper examines the extent of price interdependence between the SRI markets of Australia, Canada, Japan, UK and US over the period 1994-2007. Based on a vector autoregression context and allowing for structural break arising from the September 11 crisis, it conducts variance decomposition and impulse response analyses.

Market Mechanism and Traders’ Behavior at the Close

Yu Chuan Huang

Professor Department of Risk Management and Insurance National Kaohsiung First University of Science and Technology, Kaohsiung, Taiwan, ROC E-Mail:ychuang@ccms.nkfust.edu.tw

Shu Hui Chan

Assistant professor, Banking and Finance at Cheng Shiu University, Kaohsiung, Taiwan. R.O.C Doctoral student, Risk management and insurance at National Kaohsiung First University of Science and Technology, Kaohsiung, Taiwan. R.O.C

Keywords: Market mechanism, traders’ behavior, manipulation

ABSTRACT
This paper examines the trader’s behavior at the close before and after a new closing mechanism. On July 1 2002, the Taiwan Stock Exchange (TSEC) changed its closing price procedure to a five-minute call auction. It is found that after the new mechanism, individuals shift their trades away from the closing interval to the pre-closing interval, whereas foreign investors trade more aggressively and attempt to influence the closing prices on index futures’ expiry days. Overall, the new auction mechanism makes traders attempt to influence the stock price more difficult and expensive.[/expand title="ABSTRACT"]

Achieving a Higher Accuracy for Hull and White’s Method for Estimating Value-at-Risk

Chu-Hsiung Lin

Hsien-Chueh Peter Yang

Professor and associate professor of Department of Risk Management & Insurance National Kaohsiung First University of Science and Technology, Taiwan, R.O.C E-Mail: chusiung@ccms.nkfust.edu.tw

Chang-Cheng Changchien

Assistant professor of Department of Finance Chang Jung Christian University, Taiwan, R.O.C

Keywords: Value-at-Risk, Historical simulation, Volatility, Garman-Klass estimator.

ABSTRACTWe propose a method in which the Garman-Klass estimator is followed by the historical simulation (HS) such that the Hull and White’s method of estimating the value-at-risk of a portifolio can achieve a higher accuracy. Our proposed method does not require the estimation of the parameters for forecasting the variance in the GARCH/EWMA model and is meanwhile featured with the easy use of the HS approach. We use six international stock price indices and three hypothetical portfolios formed by these indices. The sample was observed daily from January 1, 1996 through December 31, 2006. Confirmed with the failure rates and back-testing, which are developed by Kupiec (1995) and Christoffersen (1998), the empirical results show that our method can considerably improve the estimation accuracy of Value-at-Risk. Thus the study establishes an effective alternative model for risk prediction and hence also provides a reliable tool for the management of portfolios.

Relationship between Term Structure Information and Hedge Ratio of Treasury Futures Contracts

Jian-Hsin Chou

Professor, Department of Risk Management and Insurance, National Kaohsiung First University of Science and Technology, Kaohsiung, Taiwan. E-Mail: jian@ccms.nkfust.edu.tw

Wei-Ming Wu

Associate Professor, Instituteof Business Management, National Kaohsiung First University of Science and Technology, Kaohsiung, Taiwan.

Chien-Yun Chang

Assistant Professor, Department Finance Management Hsiuping Institute of Technology, Taichung, Taiwan.

Keywords: Kalman Filter, Term Structure of Interest Rates, Hedge Ratio

ABSTRACT
This paper employs the Kalman filter to explore the impact of term structure variables in the hedging of Japanese Government Bonds (JGBs) with treasury futures. The term structure factors (level parameter, ; slope parameter, ; and curvature parameter, ) are based on Nelson and Siegel (1987) model. The out-of-sample hedging performance is also provided by moving window technology. The empirical results show the existence of significant relationships among the term structure factors, the earlier hedge ratio, and the optimal hedge ratio. However, the time-varying hedge ratio (which includes the term structure variables from the information set) did not provide good out-of-sample hedging effectiveness. Nevertheless, the out-of-sample results did demonstrate that the performance of the time-varying hedge ratio with term structure variables is better than a hedge ratio with a naive hedge or OLS model in the 7–10-year Japanese Government Bond index.

To Establish Robust Portfolio Insurance Strategy by Artificial Intelligence Method

Pai-Lung Chou

Associate professor, Department of Risk Management and Insurance, National Kaohsiung First University of Science and Technology,,Taiwan, R. O. C. E-mail: plchou@ccms.nkfust.edu.tw

Jen-Wen Sheu

Ph. D. candidate , Institute of Management National Kaohsiung First University of Science and Technology,Taiwan, R. O. C.

Chen-Hua Yao

Doctoral Student, Institute of Management National Kaohsiung First University of Science and Technology,Taiwan, R. O. C.

Keywords: Portfolio insurance strategy, Artificial intelligence method, Time invariant portfolio protection (TIPP)

ABSTRACT
The aims of this study can be integrated the various adjustment procedures by artificial intelligence method so that the problem of high cost caused by the simple adjustment procedures can be solved, and to present a new dynamic adjustment strategy based on the portfolio insurance strategy. In view of the proof from the experiment, based on the strategy of Time Invariant Portfolio Protection (TIPP), this study utilizes respectively three traditional rebalance disciplines and three technical analyses for adjustment strategies. Together with the search technique of optimization by genetic algorithm, we aim to find out the most appropriate portfolio insurance strategy. By the figures of the experiment, it is found that with this adjustment strategy, a better profit-making ability is achieved and the risk of portfolio insurance is reduced.

Assessing the Default Risk for the Residential Mortgage Loans: As the Perspective of the Decision Cost

Hsien-Chueh Peter Yang

Associate Professor of Department of Risk Management and Insurance, National Kaohsiung First University of Science and Technology, Kaohsiung 811, Taiwan.

Tsoyu Calvin Lin

Professor of Department of Land Economics, National ChengChi University, 116, Taiwan

Alex Kung-Hsiung Chang

Professor of Department of Business Administration, National Pingtung University of Science and Technology, Ping-Tung,Taiwan

Tsung-Hao Chen

Assistant Professor of Department of Business Administration, Shu-Te University, Yen Chau, Kaohsiung, 82445, Taiwan E-Mail: thchen@mail.stu.edu.tw

Keywords: threshold, residential mortgage loans, false positive, false negative, credit risk model.

ABSTRACT
Wall Street faced the financial crisis over mortgage-related securities in August 2008. Therefore USA government launched a plan to rescue the largest two mortgage companies, Fannie Mae and Freddie Mac. The worst economic pain for the people around the world is yet to come, as many economists predict a long global recession with higher rates of unemployment. Thus the International Monetary Fund has warned that the world would be facing its most dangerous economic crisis since the nineteen thirties. In this study we intend to examine the criterion of the optimal threshold at the minimum total cost. Principal findings in this study suggest that (1) in practice, the ratio of the cost of false positive to that of false negative can be used to assess the behavior of the total cost; (2) the empirical ROC, in conjunction with the cost, can be an alternative measure of the model accuracy of a credit risk model; (3) assessing a credit risk model for underwriting an individual financial contract involved misclassification costs, whereas a credit risk model used for capital estimation would emphasize the probability of default only.