Financial Crisis Prediction Research Articles

Advancing financial crisis prediction: Big data, AI, and economic theories

This paper explores the theoretical foundations of financial crisis early warning systems, focusing on the integration of big data, ensemble learning, and various financial crisis theories. It begins with defining key concepts such as big data, financial crisis, and ensemble learning, highlighting the evolution and significance of these terms in the context of financial crisis management. The literature review covers extensive research on financial crisis early warning indicators and models, tracing the development from traditional statistical methods to advanced artificial intelligence approaches, including neural networks, decision trees, and machine learning algorithms. The paper critically assesses the current methodologies and emphasizes the necessity of incorporating big data and machine learning for more accurate and comprehensive early warning systems. Theoretical foundations related to financial crises, such as information asymmetry, behavioral economics, economic cycle theory, and contingency theory, are discussed to understand their impact on financial crisis prediction and management. The conclusion synthesizes the findings and suggests future research directions, emphasizing the integration of diverse methodologies and interdisciplinary approaches to enhance the early warning capabilities of enterprises.

Game Analysis of Financial Regulation in International Financial Crisis using Multi-view Graph Convolutional Network

The concept of "game analysis" generally refers to the study and assessment of video games, frequently from the viewpoints of player experience, story, mechanics, design, and other relevant variables. It can be used for a variety of games, such as sports, board, card, and video games. A sudden drop in the value of assets or financial institutions is referred to as a financial crisis. It frequently causes the regular operation of financial markets to be interrupted and may have negative impacts on the economy as a whole. In this manuscript, Game Analysis of Financial Regulation in International Financial Crisis using Multi-view Graph Convolutional Network (GA-FR-IFC-MGCN). The proposed method comprises of four phases: dataset, pre-processing, feature selection, classification. Initially, the data is taken from Analcat dataset. Then, Federated Neural Collaborative Filtering (FNCF) method is used to enhancing the networks data. For feature selection phase, the ideal features are chosen by Siberian Tiger Optimization (STO). After, the Multi-view graph convolutional network (MGCN) method is used to classifying international financial crisis as bankruptcy and Non-bankruptcy. In general, MGCN does not express some adaption of optimization strategies for determining optimal parameters to promise exact classification of International Financial Crisis. Therefore, Harbor Seal Whiskers Optimization Algorithm is proposed to enhance weight parameter of MGCN classifier, which precisely predicts the International Financial Crisis. The proposed technique is executed and efficiency of GA-FR-IFC-MGCN depend classification framework is assessed by support of numerous performances evaluating metrics likes accuracy, recall, precision, FI-score, specificity. Finally the performance of proposed GA-FR-IFC-MGCN methods provides 25.32%, 29.30% and 27.32% higher accuracy, 22.41%, 29.30% and 24.31% higher specificity and 25.71%, 27.12% and 25.31% higher precision though analyzed with existing method likes game analysis of financial supervision in international financial crisis(GA-FS-IFC), performance evaluation of clustering techniques for financial crisis prediction(PE-CT-FC) and modified grey wolf optimizer with sparse auto-encoder for financial crisis prediction in small marginal firms (MGWO-SA-FCP) respectively.

Financial Crisis Prediction and Stock Market Analysis: A Systematic Review

Abstract: It is common known that attempting to foresee the movements of the stock market is a huge task that calls for a great lot of focus and concentration. Because of this, precisely predicting stock prices might potentially result in attractive rewards if the necessary decisions are made. This is the reason why this is the case. The non-stationary, noisy, and chaotic data that is accessible makes it difficult to generate correct forecasts about the stock market. This is because accurate predictions are difficult to produce. Because of this, it is difficult for investors to generate accurate forecasts in order to invest their money and earn a return from their investments. Various strategies are developed within the framework of the existing methodologies in order to forecast stock market movements. An overview of research articles arguing for different approaches is the goal of this study. In addition to being great academic publications, these research articles provide calculation methodologies, machine learning algorithms, performance factors, and other information. To address this recognized need, this study attempts to provide a comprehensive and current evaluation of the stock market forecasting approaches now in use. This research will include the categorization, analysis, and comparison of various approaches. In the end, the process of training and testing the model is evaluated using machine learning models. Based on the data, it is abundantly evident that logistic regression is better than any other approach that is presently being used.

Deep learning: an study on financial crisis forewarning in small and medium-sized listed enterprises

Early warning of financial crisis will greatly promote the stable development of small and medium-sized listed enterprises (listed SMEs). In this article, 13 warning indicators were selected for financial crisis prediction from five aspects: profit level, debt service level, business level, cash level, and development level. Then, the parameters of the long short-term memory (LSTM) neural network model were optimised by the whale optimisation algorithm (WOA), resulting in the WOA-LSTM model. The WOA-LSTM model achieved an accuracy of 0.975 in predicting financial crises for listed SMEs. The performance of the WOA-LSTM model was significantly enhanced when using the filtered 13 indicators as inputs, compared to using the original 24 indicators. The findings prove the dependability of the WOA-LSTM model in warning financial crises of listed SMEs and the feasibility of its application in practice.

A Hybrid CNN and LSTM based Model for Financial Crisis Prediction

A Hybrid CNN and LSTM based Model for Financial Crisis Prediction

Fuzzy Parameterized Single-Valued Neutrosophic Subset based Artificial Intelligence for Sustainable Financial Crisis Prediction and Green Finance

Predicting sustainable financial crises and promoting green finance are paramount in fast developing economic landscape. Leveraging advanced AI-driven technologies, such as Neutrosophic logic, enables a nuanced understanding of complex sustainability factors influencing financial markets. By incorporating these advanced technologies, organizations can proactively mitigate and identify risks related to unsustainable practices while fostering investment aligned with environmental, social, and governance (ESG) principles. This proactive stance improves financial resilience and contributes to the transition towards a resilient and more sustainable financial ecosystem. We can navigate future challenges with foresight and responsibility through the synergy of sustainable financial crisis prediction and green finance initiatives, which ensures a prosperous and environmentally conscious financial future for the generation to come. This study develops a new optimal Fuzzy Parameterized Single-Valued Neutrosophic Subset for financial crisis prediction and green finance (OFPSVNS-FCPGF) technique. The OFPSVNS-FCPGF technique intends to recognize the presence of the financial disaster in the sustainable and green finance sector. In the OFPSVNS-FCPGF technique, Z-score normalization is primarily used to measure the economic data into a beneficial layout. For the procedure of prediction, the OFPSVNS-FCPGF approach designs the FPSVNS approach which detects the occurrence of financial crises or not. Furthermore, the parameter tuning of the FPSVNS technique takes place utilizing the grasshopper optimization algorithm (GOA). To illustrate the improved FCP outcomes of the OFPSVNS-FCPGF model, a series of simulations were involved. An wide comparison study specified that the OFPSVNS-FCPGF method gains significant outcomes in the green finance sector.

Arithmetic Optimization Algorithm with Adaptive Neuro-Fuzzy Interference System for Predicting Financial Crisis

Financial technology (Fintech) is paramount in driving advanced technologies, economies, society, and several other sectors. Smart Fintech is the new-generation Fintech, primarily stimulated and endowed by compuational technology. Smart Fintech syndicates DSAI and renovates economies and finance for dynamic, smart, customized, automated services and systems, economies and financial companies, and the industry. The strength and development of the country’s economies are assessed by the correct forecasting. Financial crisis prediction (FCP) has the substantial consequence on the economies. Previous studies mainly emphasise statistical, DL, and ML methodologies for predicting the financial well-being of the business. Therefore, this article develops a new Arithmetic Optimization Algorithm with Adaptive Neuro-Fuzzy Interference System (AOA-ANFIS) technique for Predicting Financial Crisis. The presented AOA-ANFIS technique aims to predict the presence of financial crises or not. The model incorporates three major elements: Arithmetic Optimization Algorithm (AOA) for feature selection, Adaptive Neuro-Fuzzy Inference System (ANFIS) as the classification algorithm, and Bat Optimization Algorithm (BOA) for parameter tuning. The AOA feature selection model effectively detects the important attributes from a large proportion of financial indicators, augmenting the model's prediction capability while decreasing computational difficulty. Subsequently, the ANFIS classifier exploits the features selected for capturing the intricate non-linear relations intrinsic in financial data, permitting accurate crisis calculation. Additionally, the BOA parameter tuning model augments the ANFIS model's parameters, ensuring robustness and optimum performance. Experimental outcomes on varied financial databases validate the higher efficiency of the AOA-ANFIS technique over underlying processes, demonstrating its effectiveness in forecasting financial crises with great reliability and precision.

Jellyfish Search Algorithm Based Feature Selection with Optimal Deep Learning for Predicting Financial Crises in the Economy and Society

The financial crises has emphasized the part of financial relationship as a potential source of macroeconomic variability and systemic risk worldwide. Predicting financial crises using deep learning (DL) infers leveraging neural network (NN) to identify patterns indicative of future financial crisis and analyse complicated financial data. DL approaches such as recurrent neural network (RNN) or long short-term memory (LSTM) that process a massive quantity of past financial data such as geopolitical events, economic indicators, and market prices. These models target to identify refined connections and signals that can lead to an economic recession by learning from earlier crisis and their precursors. The problem resides in the complex and dynamic nature of financial market, demanding continuous training and modification of methods to retain significance in the aspect of developing financial condition. Although DL shows the potential to increase prediction capabilities, it's vital to accept the inherent ambiguity in financial market and the requirement for cutting-edge development of models to enhance their accuracy and reliability. This study proposes a jellyfish search algorithm based feature selection with optimum deep learning algorithm (JSAFS-ODL) for financial crisis prediction (FCP). The objective of JSAFS-ODL technique is classified the presence of financial crises or non-financial crises. To accomplish this, the JSAFS-ODL technique applies JSA based feature selection (JSA-FS) to choose an optimum set of features. Besides, RNN-GRU model can be used for the FCP. For enhancing the detection results of the RNN-GRU approach, chimp optimization algorithm (COA) can be utilized for the optimal tuning of the hyperparameters correlated to the RNN-GRU model. To guarantee the better performance of the JSAFS-ODL procedure, a series of tests were involved. The obtained values highlighted that the JSAFS-ODL technique reaches significant performance of the JSAFS-ODL technique.

Implementation of Random Forest Classifier for Financial Distress Prediction in Technology Sector Companies on the Indonesia Stock Exchange

Using the Random Forest Classifier algorithm, this study produces a financial crisis prediction model for technology companies listed on the Indonesia Stock Exchange. Historical financial statement data of eight technology companies were analyzed to generate financial indicators as prediction inputs. The results show that this model has an accuracy of 88%, with an increase in accuracy to 92% after resampling techniques. Important financial indicators used include liquidity, profitability, activity and leverage ratios. This research provides an effective predictive tool to identify companies at risk of financial distress, assisting financial management and investment decision-making.

A Novel Political Optimizer-Based Feature Selection with an Optimal Machine Learning Model for Financial Crisis Prediction

In today’s digital environment, business intelligence advances make it difficult to stay competitive and up to date on business trends. Decision-making in the financial industry is increasingly being powered by big data and machine learning. A decision-making process may be thought of as any sequence of processes that an individual goes through in order to select the option or course of action that is most suitable to meet their needs and necessities. The ability to anticipate the onset of a financial crisis is a significant economic phenomenon. A nation’s economic development and strength can be gauged by its capacity to provide an accurate assessment of the number of failed firms and the frequency with which they fail. The economics of the globe have been ravaged by recent global crises like as the COVID-19 pandemic and other recent environmental, financial, and economic disasters, which have marginalized efforts to construct a maintainable economy and civilization. The health and growth of a nation’s economy can be determined by precisely estimating the number of enterprises that will fail and the number that will succeed. Historically, there have been numerous strategies for constructing a successful financial crisis prediction (FPC) method. Effectively predicting business failures is a gauge of a country’s economic health. Several strategies are available for effective FCP. Classification performance, forecast accuracy, and legality are insufficient for practical use. Several of the suggested methods work for some issues. The specific dataset is not expandable. To improve classification, design a good prediction model adaptable to several datasets. An effective financial crisis prediction method (FPC) requires the right qualities. ML models can also be used to classify a company’s financial health. This research presents political optimizer-based feature selection (POFS) with optimal cascaded deep forest (OCDF) for FCP in big data environments. Hadoop Map Reduce handles huge datasets. POFS reduces computing complexity by handling feature selection. POFS is an original FCP algorithm categorization using OCDF. SFO is used to optimize CDF model parameters. A thorough simulation study was performed to evaluate POFS performance on benchmark datasets OCDFs. The results confirmed the POFS-OCDF method’s superiority over state-of-the-art approaches. With an outstanding sensitivity of 0.912, specificity of 0.953, accuracy of 0.944, F-score of 0.930, and Matthews correlation coefficient (MCC) of 0.912, the proposed POFS-OCDF technique has shown optimum results. The experimental results demonstrated that the POFS-OCDF technique outperformed other recently developed strategies on a variety of criteria. As previously stated, Sunflower optimization (SFO) is also used to tune the Cascaded Deep Forest (CDF) parameters. A detailed simulation analysis is performed based on the benchmark dataset to evaluate the higher classification efficiency of the POFS-OCDF technique. The invention of the POFS algorithm for FCP exemplifies the work’s originality.

Hybrid Hunter–Prey Optimization with Deep Learning-Based Fintech for Predicting Financial Crises in the Economy and Society

Financial technology (Fintech) plays a pivotal role in driving contemporary technology, society, economies, and many other fields. The new-generation Fintech is Smart Fintech, mainly empowered and inspired by data science and artificial intelligence (DSAI) technologies. Smart Fintech combines DSAI and transforms finance and economies for driving automated, intelligent, personalized financial and economic businesses, services and systems, and the whole of business. The strength and growth of the country’s economy were evaluated with the accurate prediction of how many companies will succeed and how many will fail. Financial crisis prediction (FCP) has a considerable effect on the economy. Prior research focuses mainly on deep learning (DL), machine learning (ML), and statistical approaches for forecasting the financial health of a company. Thus, this study presents a hybrid hunter–prey optimization with a deep learning-based FCP (HHPODL-FCP) technique. The objective of the HHPODL-FCP algorithm lies in the effective identification of the financial crisis in enterprises or organizations. To accomplish this, the HHPODL-FCP method makes use of the HHPO algorithm for the feature subset selection process. In addition, the HHPODL-FCP technique employs the gated attention recurrent network (GARN) model for the identification and classification of financial and non-financial crises. The HHPODL-FCP method exploits a sparrow search algorithm (SSA)-based hyperparameter tuning process to enrich the performance of the GARN model. The simulation results of the HHPODL-FCP method are tested on different financial datasets. A wide range of experiments highlighted the remarkable performance of the HHPODL-FCP method over recent techniques under various measures.

Credit growth, the yield curve and financial crisis prediction: Evidence from a machine learning approach

We develop early warning models for financial crisis prediction applying machine learning techniques on macrofinancial data for 17 countries over 1870–2016. Most nonlinear machine learning models outperform logistic regression in out-of-sample predictions and forecasting. We identify economic drivers of our machine learning models by applying a novel framework based on Shapley values, uncovering nonlinear relationships between the predictors and crisis risk. Throughout, the most important predictors are credit growth and the slope of the yield curve, both domestically and globally. A flat or inverted yield curve is of most concern when nominal interest rates are low and credit growth is high.

Design of a corporate financial crisis prediction model based on improved ABC-RNN+Bi-LSTM algorithm in the context of sustainable development.

In the context of sustainable economic development, while economic globalization brings new vitality to the company, it also makes the company face an increasingly severe external environment. The managers have to shift their focus to capital market investment. The excessive pursuit of investment benefits can easily lead to decision-making errors, resulting in a financial crisis for the company, and even may be forced to delist in severe cases. This article proposes a financial crisis prediction model based on Artificial Bee Colony-recurrent neural network (ABC-RNN) and bidirectional long short-term memory (Bi-LSTM) company with a characteristic attention mechanism. We combined ABC-RNN with Bi-LSTM to extract more temporal feature vectors from financial data. Then we introduced a feature attention mechanism to extract better depth features from financial data; the ABC algorithm is introduced to optimize the weight and bias of RNN to improve the reasoning speed and accuracy. The experiment shows that the prediction accuracy and recall of the model on the test set have reached 88.94% and 88.23%, respectively, which has good prediction ability. The outcome of this research helps the company to prevent and deal with the financial crisis in time and promote the sustainable development of the market economy.

Eagle Strategy Arithmetic Optimisation Algorithm with Optimal Deep Convolutional Forest Based FinTech Application for Hyper-automation

ABSTRACT Hyper automation is the group of approaches and software companies utilised to automate manual procedures. Financial Technology (FinTech) was processed as a distinctive classification that highly inspects the financial technology sector from a broader group of functions for enterprises with utilise of Information Technology (IT) application. Financial crisis prediction (FCP) is the most essential FinTech technique, defining institutions’ financial status. This study proposes an Eagle Strategy Arithmetic Optimisation Algorithm with Optimal Deep Convolutional Forest (ESAOA-ODCF) based FinTech Application for Hyperautomation. The ESAOA-ODCF technique has achieved exceptional performance with maximum accu y of 98.61%, and F score of 98.59%. Extensive experimental research revealed that the ESAOA-ODCF model beat more modern, cutting-edge approaches in terms of overall performance.

An Intelligent Internet-of-Things-Aided Financial Crisis Prediction Model in FinTech

Financial technology (FinTech) has become a hot research topic recently, moreover, an area of major investment for most financial institutions. As the FinTech unleashed many new strategic solutions for major financial problems. One of those pivotal strategies of FinTech is financial crisis prediction (FCP) that dictates the financial status of an institution. Also, the rise of the Internet-of-Things (IoT) technology has paved a new way for interaction between humans and the physical world. Therefore, IoT can feasibly be incorporated into the FCP model to obtain a real-time analysis of the financial data from the clients. With this perspective, we propose an intelligent IoT-aided FCP model using metaheuristic algorithms. The proposed FCP method comprises data acquisition, preprocessing, feature selection (FS), and classification. First, the financial data of the enterprises are collected using IoT devices, such as smartphones, laptops, etc. Next, the quantum artificial butterfly optimization (QABO) approach for FS is applied to choose an optimal set of features. Afterward, long short-time memory (LSTM) with recurrent neural network (RNN) model is employed to classify the collected financial data. An exhaustive experimental validation process is carried out to ensure the performance of the proposed QABO-LSTM-RNN model. The simulation results accredited the efficacy of the proposed model contrasted with other baseline methods in terms of best cost, sensitivity, specificity, accuracy, F-score, kappa, and Mathew correlation coefficient (MCC).

Deep Learning Enabled Financial Crisis Prediction Model for Small-Medium Sized Industries

Recently, data science techniques utilize artificial intelligence (AI) techniques who start and run small and medium-sized enterprises (SMEs) to take an influence and grow their businesses. For SMEs, owing to the inexistence of consistent data and other features, evaluating credit risks is difficult and costly. On the other hand, it becomes necessary to design efficient models for predicting business failures or financial crises of SMEs. Various data classification approaches for financial crisis prediction (FCP) have been presented for predicting the financial status of the organization by the use of past data. A major process involved in the design of FCP is the choice of required features for enhanced classifier outcomes. With this motivation, this paper focuses on the design of an optimal deep learning-based financial crisis prediction (ODL-FCP) model for SMEs. The proposed ODL-FCP technique incorporates two phases: Archimedes optimization algorithm based feature selection (AOA-FS) algorithm and optimal deep convolution neural network with long short term memory (CNN-LSTM) based data classification. The ODL-FCP technique involves a sailfish optimization (SFO) algorithm for the hyperparameter optimization of the CNN-LSTM method. The performance validation of the ODL-FCP technique takes place using a benchmark financial dataset and the outcomes are inspected in terms of various metrics. The experimental results highlighted that the proposed ODL-FCP technique has outperformed the other techniques.

Feature Selection with Optimal Variational Auto Encoder for Financial Crisis Prediction

Financial crisis prediction (FCP) received significant attention in the financial sector for decision-making. Proper forecasting of the number of firms possible to fail is important to determine the growth index and strength of a nation’s economy. Conventionally, numerous approaches have been developed in the design of accurate FCP processes. At the same time, classifier efficacy and predictive accuracy are inadequate for real-time applications. In addition, several established techniques carry out well to any of the specific datasets but are not adjustable to distinct datasets. Thus, there is a necessity for developing an effectual prediction technique for optimum classifier performance and adjustable to various datasets. This paper presents a novel multi-vs. optimization (MVO) based feature selection (FS) with an optimal variational auto encoder (OVAE) model for FCP. The proposed multi-vs. optimization based feature selection with optimal variational auto encoder (MVOFS-OVAE) model mainly aims to accomplish forecasting the financial crisis. For achieving this, the proposed MVOFS-OVAE model primarily pre-processes the financial data using min-max normalization. In addition, the MVOFS-OVAE model designs a feature subset selection process using the MVOFS approach. Followed by, the variational auto encoder (VAE) model is applied for the categorization of financial data into financial crisis or non-financial crisis. Finally, the differential evolution (DE) algorithm is utilized for the parameter tuning of the VAE model. A series of simulations on the benchmark dataset reported the betterment of the MVOFS-OVAE approach over the recent state of art approaches.

A study on corporate financial crisis prediction strategy based on particle swarm improved fuzzy clustering method from accounting perspective

A study on corporate financial crisis prediction strategy based on particle swarm improved fuzzy clustering method from accounting perspective

A study on corporate financial crisis prediction strategy based on particle swarm improved fuzzy clustering method from accounting perspective

A study on corporate financial crisis prediction strategy based on particle swarm improved fuzzy clustering method from accounting perspective

An Intelligent Hybrid Model Using Artificial Neural Networks and Particle Swarm Optimization Technique For Financial Crisis Prediction

Financial crisis prediction is a critical issue in the economic phenomenon. Correct predictions can provide the knowledge for stakeholders to make policies to preserve and increase economic stability. Several approaches for predicting the financial crisis have been developed. However, the classification model's performance and prediction accuracy, as well as legal data, are insufficient for usage in real applications. So that, an efficient prediction model is required for higher performance results. This paper adopts a novel two-hybrid intelligent prediction model using an Artificial Neural Network (ANN) for prediction and Particle Swarm Optimization (PSO) for optimization. At first, a PSO technique produces the hyperparameter value for ANN to fit the best architecture. They are weights and thresholds. Then, they are used to predict the performance of the given dataset. In the end, ANN-PSO generates predictions value of crisis conditions. The proposed ANN-PSO model is implemented on time series data of economic conditions in Indonesia. Dataset was obtained from International Monetary Fund and the Indonesian Economic and Financial Statistics. Independent variable data using 13 potential indicators, namely imports, exports, trade exchange rates, foreign exchange reserves, the composite stock price index, real exchange rates, real deposit rates, bank deposits, loan and deposit interest rates, the difference between the real BI rate and the real FED rate, the M1, M2 multiplier, and the ratio of M2 to foreign exchange reserves. Meanwhile, the dependent variable uses the perfect signal value based on the Financial Pressure Index. A detailed statistical analysis of the dataset is also given by threshold value to convey crisis conditions. Experimental analysis shows that the proposed model is reliable based on the different evaluation criteria. The case studies show that the result for predictive data is basically consistent with the actual situation, which has greatly helped the prediction of a financial crisis.