An integrated approach of system dynamics simulation and fuzzy inference system for retailers' credit scoring

The assessment of retailers' credit risk is a complex task in which financial risks enable different behaviour mechanisms and this adds to the complexity of the problem. The modelling approach of this article incorporated behavioural styles of retailers in repayment of their liabilities into an integrated fuzzy system dynamics model of retailers' credit scoring. This study introduces an integrated system dynamics model to study credit risk of retailers. To this end, first the influencing factors on the retailers' credit risk should be determined. Then the relation between these variables should be specified in the system dynamics model. The fuzzy uncertainty also is dealt with using the integration of system dynamics model and fuzzy inference system (FIS). The contribution of this article is twofold. First, this is the first study that proposes a system dynamics model to analyse credit risk of the retailers. Second, the proposed model of this study integrates system dynamics model with FIS modelling concept to address the fuzzy uncertainty and non-linearity in the modelling environment.