Adaptive inference-based learning and rule generation algorithms in Fuzzy Neural Network for failure prediction

Abstract

Creating an applicable and precise failure prediction system is highly desirable for decision makers and regulators in the finance industry. This study develops a new Failure Prediction (FP) approach which effectively integrates a fuzzy logic-based adaptive inference system with the learning ability of a neural network to generate knowledge in the form of a fuzzy rule base. This FP approach uses a preprocessing phase to deal with the imbalanced data-sets problem and develops a new Fuzzy Neural Network (FNN) including an adaptive inference system in the learning algorithm along with its network structure and rule generation algorithm as a means to reduce prediction error in the FP approach.