Financial credit risk assessment: a recent review

Abstract

The assessment of financial credit risk is an important and challenging research topic in the area of accounting and finance. Numerous efforts have been devoted into this field since the first attempt last century. Today the study of financial credit risk assessment attracts increasing attentions in the face of one of the most severe financial crisis ever observed in the world. The accurate assessment of financial credit risk and prediction of business failure play an essential role both on economics and society. For this reason, more and more methods and algorithms were proposed in the past years. From this point, it is of crucial importance to review the nowadays methods applied to financial credit risk assessment. In this paper, we summarize the traditional statistical models and state-of-the-art intelligent methods for financial distress forecasting, with the emphasis on the most recent achievements as the promising trend in this area.