A FAIRNESS MODEL BASED ON INTERVAL TYPE-2 FUZZY SET FOR ISLAMIC FINANCING SCORING IN INDONESIA

Abstract

Conventional credit scoring model could lead to serious and unfair problems because in certain case it would incriminate one party in financing. Islamic financing scoring model complies with Sharia rules and ensures fairness among parties. Currently, there are no certain rules on Islamic financing scoring model which lead to subjective judgments. In the subjective judgments, words could mean different things to different people. Thus, this paper proposed and deployed models for scoring of default risk level by using Interval Type-2 Fuzzy Set model to support the subjective judgments in maintaining Sharia rules. Installment amount and the sum of delay period has used as variables for that scoring. Interval Type-2 Fuzzy Set model was proposed to support the subjective judgments in maintaining Sharia rules. Beginning delay period also used as a weight to the risk scoring results. Besides that, this paper also proposed the method for computing real loss value. It has used as a basis for fines computation according to default risk level, bad debt expense, and installment weighted average.