Abstract-The prediction of corporate bankruptcies is an important and widely studied topic since it can have significant impact on bank lending decisions and profitability. This work presents two contributions. First we review the topic of bankruptcy prediction, with emphasis on neural-network (NN) models. Second, we develop an NN bankruptcy prediction model. Inspired by one of the traditional credit risk models developed by Merton, we propose novel indicators for the NN system. We show that the use of these indicators in addition to traditional financial ratio indicators provides a significant improvement in the (out-of-sample) prediction accuracy (from 81.46% to 85.5% for a three-year-ahead forecast). Index Terms-Asset-based model, bankruptcy prediction, corporate distress, corporate failure prediction, credit risk, default prediction, financial ratios, financial statement data, multilayer networks.
In REF , Neural Network(NN) based model is used with some novel indicator for the prediction.
Bankruptcy Prediction for Credit Risk Using Neural Networks: A Survey and New Results
IEEE transactions on neural networks
IEEE transactions on neural networks
Computer Science Medicine