Statistics ReportGROUP MEMBERS: Shao Xiayu(SCN 20085878339 )Yang Zheng(SCN 20085878040 )Liang Han(SCN 20085878018 )Liang Zhanning(SCN 20085878087 )Zhang Yajie(SCN 20085878335 )Zhou Weifeng(SCN 20085878271 )TO: Su NanClass: International TradeDate: May 23. 2010Letter of transmittalThe report is written for HSBC‟s Research Headquarters. The report has finished at May 20, 2010. and finished with team work.Executive summaryThe report‟s structures are descriptive analysis, inferential analysis and decision making analysis. The methods are used in the case are probability distribution and quantitative approach. Through analysis the bank RBCC, bankers accepted the personal loan never considering Gender. Bankers prefer to lend them money because their family and income more stable. People whose ages between 30 to 50 also lend more money from RBCC. If the family has more children they will have more debt. In RBCC there are 15.3% customers go into default. RBCC collect the default debt by approach the customers the right way which falls behind on payments. When HSBC manage its subsidiaries they should control the subsidiaries‟managers. And fully control their shares.ContentsExecutive summary (2)Introduction (4)List of table (5)Assumptions (5)Task 1. Theoretical Statistics (6)Question one: (6)Question two: (6)Question three: (7)Question four: (7)Question five: (10)Question six: (11)Task 2: Application Statistics (12)Question one (12)Question two (14)Question three (16)Task three: Business Decision Making (17)Question 1. (17)Question 2. (18)Question 3. (19)Question 4.. (20)Question 5. (22)Question 6. (23)Question 7. (24)Conclusion (25)Recommendation (25)Reference list (25)Distribution the assignment (26)Meeting Schedule (26)IntroductionThis report is consists of three parts, theoretical statistics, application statistics, and business decision making. In theoretical statistics, it main to explain the basics knowledge of statistics, such as primary information, second information and method of data collection and so on. It has six questions. In application statistics. It main to explain the bell distribution of statistics. In business decision making. It main to deal with default debt, the follows is our report.List of tableAssumptions●all given information are true and correct●assumptions are binominal distribution●the confidence level is 95% through the whole report●the average service fee is 13.8 per month in each bank●Different lenders has different loan coefficient and the given different interest ratesTask 1. Theoretical StatisticsQuestion one: Distinguish primary sources and secondary sources?Primary informationPrimary information is that collected from our experienced and we sort out from files. Primary information has stronger confidential. First-hand information refer to: literature and cultural information. Primary information on the holders of the data and firstly contact with that information, but also has a high degree of confidentiality.Primary information with the empirical, and the advantages is lively and readable.In case study, the conversation of Juli Beck, Andy Beck, and Dan beck is Primary information.secondary dataSecondary data is that already exists somewhere and has been for a purpose or what happened up the data editor. secondary sources (secondary data)refer to other purpose that others had previously collected, rather than the researchers on hand to collect information on their research。
In case study, the summary of HSBC‟s History and foundation and growth are the secondary data.Question two: Describe and justify the survey methodology used for data collection related to the caseThere are many methods of data collection. Such as, observation, survey, questionnaire, search in the online, face to face investigation. In the case, we can find it has search in the online and investigation by face to face.The current management team, led by Julia, Daniel, and Andrew Beck (the president, CFO, and COO, respectively) has engaged your consulting team to analyze data from1,000 recent loans and make recommendations. This is primary information.This HSBC case has been clear up by somebody. So it can be defined second information.From the case, we can find it has used group research and phone interviewQuestion three: If ask you designed the questionnarie for colleting the data, what types of question you will use ? consider the charecterists of different types of question for data analysis.In the case, open questions are more than closed questions. Open questions can make more kinds of answer about one question. People‟s thought can be opened, Understand everyone idea about it. We also can compare them then choose the best answer. On the other hand, it may make some answers which are unable. it is difficult to statistic data, what‟s more, we need more time to statistic data, people have same question that we can not find common ideas.Question four: Using the different variables for RBCC, you will be required to present the a set of data which are in Excel file rbcc.xls by appropiate charts or diagrams ? (at least three charts or diagrams)a.Pareto chart of Marital Status of HSBCMaritalStatus Number PercentageSingle 288 28.80%Married 562 56.20%Divorced 89 8.90%Widow 61 6.10%Total 1000 100%Look at the chart, we can find married easiest to credit from HSBC, about 56% loaners are married. And single easier take out a loan than divorced and widow. It was indicating that the HSBC has chosen to loan to who has complete family, which emphasis on stability.b. Pie chart of children of loanerchildren people percentage0 414 42%1 199 20%2 158 16%3 115 11%4 60 6%5 40 4%6 15 1%Look at the chart, we can found the loaners of no children easiest to take out a loan from HSBC, while the loaners of a child and the loaners of two children not easy to loan from HSBC. The chart was indicating that the children of more and more difficult access to loan. If family has some children, it would has some press in family, so bank don‟t like loan to the people like that.c. The bar chart of genderGender totalfemale 496male504Look at the bar chart, we can find the no impact of gender on loans.Question five: Using “income” as the key variable for RBCC, calculates the mean, median, mode, quartile, and measure of dispersion of data.We calculate the mean is $49,481, and the median is $49518, the mode is 65311.we can get some information from that, such as they level of income and the capacity of purchasing. Skew, Because of the mean<median, so it belonged to theleft-skewAnd the max is $89489, the mix is $9118. Then we can get the range is 80371.So it can tell us that their income is not equality, so the company will face the risk.We can calculate the standard deviation, because of their means is $49,418, the standard deviation is 18586.34, Because of different marital status has different mean, so we compare single and divorced, CV(single)=0.19, CV(divorced)=0.08.CV (divorced) < CV (single). So we can get the conclusion that because of the dataof income, it has not z-score, so the bank can get more profit. Through the analysisthe data, we find the kurtosis is -1.02219063; it can represent the mild of their incomeThrough the calculating and analysis, we assumption x=divorced and y=widowed that they have 48, so we can get the result R=0.08, it was not nearly 1, it has not connect.Question six: Using the appropriate set of data, you will be required to create the histogram?接收频率累积%5000 0 0.00%10000 2 0.20%15000 13 1.50%20000 33 4.80%25000 60 10.80%30000 69 17.70%35000 88 26.50%40000 83 34.80%45000 87 43.50%50000 73 50.80%55000 78 58.60%60000 81 66.70%65000 81 74.80%70000 87 83.50%75000 73 90.80%80000 50 95.80%85000 36 99.40%90000 6 100.00%其他0 100.00%From the chart we can find the people which income about $45000 is easier to take out a loan from HSBC. Through analysis the chart the people which income between 35000 to 75000 is main loaner to loan from HSBC and other income not easier to loan from HSBC.The bank cans choice to loan to people which between 35000 to 75000, because of it easy to take back.Task 2: Application StatisticsQuestion oneDue to economic going to down from 2008, the commercial bank has been decline for a period. In an attempt by commercial banks to raise revenue, many banks increase the service charge, typically between $10 to $20. According to commission of banks, about 90% of commercial banks charge the customer fees when applying for the loan or opening accounts.a.You select a random sample of 5 commercial banks in China. Assume the numberof the 5 commercial bank charging service feels distributed as binomial random distribution. What are the mean and standard deviation of the distributionb. compute the probability that of the 5 banks:1. exactly one bank charges service fee2. two or fewer banks charge service fee3. three or more banks charge service feeAnswer: a. From the question, we can find sample size is 5, and probability of success is 0.9,mean=5*probability, the standard deviation=)1(**5p p . So we can get the mean is 4.5, the variance is 0.45,and the standard deviation is about 0.67.b:The result is:binomial probabilities table xp(x)0 1E-05 1 0.00045 2 0.0081 3 0.0729 4 0.32805 5 0.59049It has a bank to receive the services fee that's probability is 0.00045, from this we can find has increased the cost of management, it may be reduce its competitiveness, it would lose the advantage of competitive.If there are two or fewer banks charge service fee, their probability is 0.0081, because of their probability is very small, if they want to improve their services fee, they need to build better services for customers or other advantages to different to other banks.When there are three or more banks charge service fee, lots of consumers can accept this fact, their probability is 0.073, the consumer would pay the services fee to bank, and the government can agree this term.Banks charge service fees, and it has two different ways, receive or not receive,moreover, these two cases are mutually exclusive events, and the sum probability of two cases is 1. Besides, the binomial distribution is belonged to multiple. So it conform all the standards about Bernoulli experimentsQuestion twoHSBC‟ share in Hong Seng Index , the number of shares traded daily on the Hong Kong Stock Exchange is freferred to as the volume of trading. On July 30, 2009, 1.39 billion shares of stock were traded. Theis volume to trading is near the mean volume for the Hong Seng Index. Assume that the number of share traded on Hong Seng Index is noraml random distribution with mean 1.4 billion and a standard deviation of 0.15 billion. For a randomly selected day, what is the probability that the volume of trading on the Hong Seng Index is :a.below 1.8 billionb.below 1.2 billionc.above 1.0 billionAnswer:From the condition, we can know that they are normal distribution, so it has the characteristic, their average are equals with media, and they are uniform, their normal distribution is bell distribution.Below 1.8 billionBelow 1.2 billionAbove 1.0 billionQuestion threeIn scenario, the following data represent the monthly service fee in dollars if a customer …saving account falls below the minimum $ 2000 balance for a sample of 10 banks for direct –deposit customer.12, 10, 10, 12, 15, 15, 12, 12, 20, 10a. construct a 95% confidence interval for the population mean monthly service fee in dollars if a customer‟s account balance falls below the minimum required balance Answer:When calculate the z-value, we can get the number must greater than 30, but in this process, their number is 10, so we can use the T value to get the level of confidence. We can through the nstx ± to calculate the confidence level. We to analysis the excel can get the result is mean is 12.8 and standard deviation is 3.12So we can defined the x =12.8 s= 3.12, from the table, we can know that t=2.26,16.310==n , according to the nstx ±, we can get the their confidence level is12.8-2.26*(3.12/10)≤≤μ12.8+2.26*(3.12/10)=10.57≤≤μ15.03. From this we can get the conclusion their overall mean was in their interval, very money receive the services in the interval.Because their overall mean is 13.8.Step 1: The null hypothesis is that the services fee mean has not changed from its previous values of 13.88.13= H (Assume it is true)The alternative hypothesis is the opposite of the null hypothesis. Since the null hypothesis is that the services fees means is 13.8, the alternative hypothesis is that services fee mean is not 13.8H1:μ>13.8(as to the bank receive the services fees)Step 2: You have to selected a sample of n=10, the level of significance is 0.025. Step 3: Because σ=is known, you use the normal distribution and the T-text statistic. Step 4: Since α=0.025, the critical values of the T-text statistic are -2.26 and +2.26. The rejection region is T<-2.26 or Z>+2.26. The region is -2.26<T<+2.26.Step 5: You collect the data and services fee 8.12=x , the overall means is 13.8, the standard deviation is 3.12, we can use the Z=-1.01Step 6: Since Z=-1.01>-2.26, it belonged to the region, the consumer can agree to receive the services fees that was higher than 13.8.Task three: Business Decision MakingFrom all information given, you need to consider the following problems: Question 1. What pr oportion of RBCC’s customers go into default? Answer:We can use the pivot able to calculate the result.From the chart table, we can get the conclusion that it‟s proportion 15%: 85%, from this proportion, we can see it, there will be 15% people who are default, their reputation will reduce and that would be affecting their credit in the future. The company should take measure to manage the people who are default. Otherwise, there will be a lot of bad debt of bank, which will directly affect the economic interests of banks.Question 2. What criteria should RBCC use when deciding which customers are good credit risks? If you were to recommend a set of variables for RBCC to use, which variables would you use?Answer: let us to arrange it, Income is first, because of this is the most is the basic condition for loans. The second is Debt, because of this reflects the individual's external debt situation, the third is Credit Rating, because of it reflecting his own credibility, to see whether banks can accept, the fourth is Marital Status, because of it reflects the ability of family income, then is children and age, the finally is gender.Question 3. Once a loan is in default, what “script” should they use to try and collect the overdue debt?You should include in your report statements about Hypothesis-testing methodolgy ,p-values, where appropriate.Exhibit 1.Also:Answer:The most commonly used three scripts are A, B, C. “A” indicates the “Responsibility” appeal; if the customer goes through the “A” appeal and still not willing to pay the debt then RBCC can reduce the customer‟s credit level of rank. Script “B” indicates the “Credit Rating” appeal, if script “B” is also not wo rking to the customer, RBCC can reduce the customer‟s credit level. The third script is focuses on the threat of legal action referring as scr ipt “C”. Script “C” indicates the “Legal” appeal, which is that RBCC can request the court to assist for debt collection.Question 4. Evaluate each of the following loan applicants, and make recommendations to the Becks as to which of them ought to be approved for a loan. Rank them in order of credit-worthiness and discuss your conclusions.Subject MaritalStatusB&HRating Children Age Income Debt GenderLEE Married A 4 24 $50,049 $92,876 Male Ferreira Single B 1 34 $21,334 $139,639 Male Aboud Divorced E 1 40 $49,638 $33,509 Male Coismain Single C 0 27 $35,541 $25,589 Female Arnold Married A 2 35 $53,269 $93,890 Female Chandra Widowed D 0 69 $44,070 $41,143 Female Manya Divorced E 1 36 $43,243 $29,775 FemaleBakshi Married C 1 32 $19,223 $18,006 MalePaul Married D 3 34 $33,754 $55,331 Male Scott Married B 2 29 $56,893 $44,657 Male Answer: We can be obvious see that their S can be divided into five parts that is A is 0.4, B is 0.5, C is 0.6, D is 0.7, E is 0.8. and we can analysis it in five credit ways.From the table, the LEE and Aronld‟s reputation level is A. they were credit from individual reputation or other ways, their risk indicator is low than 0.5, so they easy to get the debt from bank, but Ferreira and Scott‟s B&H Rating is B, and B is means 0.5, when they credit using the fixed asset mortgage, their risk indicators are 0.1, 0.35, 0.25, 0.4, because of they are low than 0.5, so the bank would like to credit for them, because of the bank have small risk.But as to Scott, because of he risk indicators is 0.5, but she is married, so when she pay the credit can through their income, and prepared their income and credit, the can pay the credit easily, so the bank can credit for her.Coismain and Bakshi, because of their B&H rating is equally that is 0.6. Through the table we can get the conclusion, when they use the other four, their risk indicators islow than 0.5, the bank would like to credit for them.Chandra and Paul, when they credit use the 20%, 50%, 70%, their risk indicators is low than 0.5, they can get the credit from bank.Aboud and Manya, from the 20%, 50%, we can get their risk indicators is 0.16, 0.4, they can debt from bank, from the 80%, 100%, we get the risk indicators is 0.64, 0.8, they are high than 0.6, they hardly to credit from bank. In the 70%, their risk indicators is 0.56, so they need to consider other reason, such as Aboud‟s age, her income is $49,638, her credit is $33.509, her income is high than her credit, and she have 1 children, she use the 70% to credit, so she can repay the credit easily, so the bank can credit for her. But as to Manya, the bank ought to credit for herQuestion 5. If all of these applicants were to be approved for a loan, what sort of interest rates would the Becks charge them, so that each applicant contribute 10% expected annual profit for RBCC? Make any necessary assumptions and state them clearly. (Assume that the Becks can charge a different rate to each customer, depending on their estimated risk of default.)Answer:Assumption ten people are credit from individual, they will credit $50000. Their confidence level is 95%we can get their risk indicators isFrom this we can get their mean is 0.42 and standard deviation is 0.1, then we can get their confidence interval. Because of their means is 0.42, the standard deviation is 0.1,μ0.49, from their mean is in their so we can get the confidence interval is 0.35≤≤interval.Because of the bank receive the credit interest is 3%≤interests≤12%, we can get the conclusion that when we credit from the bank, we need to consider our risk indicators, to build high credit ranking, if that we can get the credit easily.Each applicant contribute the annual profit to HSBC = 50,000* each applicants'Form this, we can get the conclusion that when we credit from the bank, we need to build high credit ranking, because of the risk indicators is high the profit is high. Bank would credit to people like that, if do that the bank can get more profits.Question 6. RBCC how to collect the default debt, what the further action they need to take?Answer: The further action that the RBCC need to take to collect the default debt it‟s that they need to prepare to analysis of different accounts. According to the different age length of the receivable accounts, to determine the proportion of the bad debt that needsto be received due to the default.. Once a loan is in default there are four most commonly used methods that the bank will use to collect the overdue debt. First one is to phone or send mails to the mortgagors that a loan default may have negative effect on their credit rating. The second one is to dispose the mortgagor‟s mortgages. The third one is to in quire into relative warrantor‟s responsibilities. Fourth one is to enable legal procedures, request the court to assist for debt collection.Question 7. As HSBC, what’s the action will be considered in future for supervising the subcidiaries to avoid lots of amont of default debt ?If the HSBC want to control their financial institution, or avoiding the default, they can increase the profits , it can affect the financial institution and control money supply, and descend the bank's risk, HSBS can engage the person who has the experience to mange the RSBS, and improve the credit card，in currently, some bank have improved their risk indicators, that is 0.5, it avoid the default, maintaining the bank's profit. they can check the accounts in fixing date. The HSBC would like to improve the internal control, to avoid the internal conflict, and encourage them to realize the financial market and business environment, then to do the better decision to the RSBC.ConclusionThis report has some questions, it all need use our used knowledge of statistics.We use the table to analysis the data, such as we use the pareto table to analysis the data and get the married easiest to credit from HSBC, and to explain the default debt, and use we studied method of solve default debt to deal with the default debt customers of HSBC.These issues are related to the knowledge we have learned, we use we learned to deal with these issues in flexibility.RecommendationSome people have default debt, it impact on the HSBC‟s profits. The HSBC may improve its interest rate. Because of it can reduce a lot of default debts. When people want to lend money from HSBC, they will consider they really can afford the interest rate or not. When customers apply business in HSBC. It can reduce the amount of service charges.Reference listDavid M. Levine/Timothy C. Krehbiel/Mark L.Berenson, Business Statistics, 2006Ken Black, Business Statistics, 2006Distribution the assignmentMeeting Schedule。
