A Risk Assessment Model for Financing Housing Projects.

Student Name: Nagaraj B. Kulkarni

Two alternative logistic regression models were developed and compared for Risks (classified as Risky and Safe) associated with housing projects financed by HDFC. In the first model, various independent variables, suggested in the literature, were first used to model the ratings of Marketability, Management Quality, Technical Capability, Financial Strength and Project Viability of a sample of 28 projects, which in turn were used to model the final riskiness of the projects. That is a two-tier approach was taken in the first model. The second model had an additional intermediate tier of Company Rating (modeled using Management Quality, Technical Capability, and Financial Strength) and Project Rating (modeled using Marketability and Project Viability) for modeling the final riskiness of the projects. The first model was found to be superior than the second, which was then packaged as a software with GUI for aiding the decision making process of whether to finance a given project or not, by determining its risk.