Hybrid neural network models for bankruptcy predictions

Abstract

The objective of this paper is to develop the hybrid neural network models for bankruptcy prediction. The proposed hybrid neural network models are (1) a MDA-assisted neural network, (2) an ID3-assisted neural network, and (3) a SOFM(self organizing feature map)-assisted neural network. Both the MDA-assisted neural network and the 11)3-assisted neural network are the neural network models operating with the input variables selected by the MDA method and 1133 respectively. The SOFM-assisted neural network combines a backpropagation model (supervised learning) with a SOFM model (unsupervised learning). The performance of the hybrid neural network model is evaluated using MDA and ID3 as a benchmark. Empirical results using Korean bankruptcy data show that hybrid neural network models are very promising neural network models for bankruptcy prediction in terms of predictive accuracy and adaptability.