Weaknesses of reduced form models:

Unless the model has been formulated and backtested properly, the **hazard rate estimation procedures** may not be valid.

What does **hazard rate estimation procedures** mean. Thanks.

Weaknesses of reduced form models:

Unless the model has been formulated and backtested properly, the **hazard rate estimation procedures** may not be valid.

What does **hazard rate estimation procedures** mean. Thanks.

Hazard rate is simply another name for ‘conditional probability of default’ . So in this case I assmue that it means that the probability results are unreliable.

Thanks!

This approach is easier to understand. Many thanks.