Influence of Inflation on Interest in Public Banks
Hi everyone, in this article i will explain my second project in Istanbul Data Science Academy. As you can see of the title, i work on Inflation and interest data.
Data available on https://www.tcmb.gov.tr/. Just you need merge !
Banks are affected by inflation rate while regulating interest rates. In this context, it is possible to estimate the inflation rate by using bank interest rates.
To understand the data, a short EDA can be made first.
I have listed the steps to be taken when developing a model for estimation as follows:
- Careful to overfit or underfit
- Feature Engineering
- Choose best model (Ridge-Lasso, etc)
- Develop model
I put the data into a Linear model without making any changes, this process remains very simple, but I will improve the result.
First r² = 0.809
Not bad for first try.
There is another important point to note, NaN values.
We need to take action for NaN data, the process here should be smart. I have averaged the column to fill NaN data. However, a different process can be applied.
After the data preparation, i continued model selection.
Let’s look at corolation for “dep variable”. Then let’s go to ML model with important columns. The important point here is at the result for several different models.
Whichever model gives higher results (Lasso, Ridge, Polynomial, Lineer regression) , i use it.
As a result Linear Regression gave high r2, This model provides a more successful predict.
For the codes of the project:
https://github.com/denizparlak1/datascience-project/tree/master/project-2
Have a good day.
