Advancing bankruptcy forecasting with hybrid machine learning techniques: Insights from an unbalanced Polish dataset
The challenge of bankruptcy prediction, critical for averting financial sector losses, is amplified by the prevalence of imbalanced datasets, which often skew prediction models. Addressing this, our study introduces the innovative hybrid model XGBoost+ANN, designed to leverage the strengths of both...
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| Main Authors: | , , , , |
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| Format: | Article |
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Institute of Electrical and Electronics Engineers
2024
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| Subjects: | |
| Online Access: | http://eprints.um.edu.my/44183/ https://doi.org/10.1109/ACCESS.2024.3354173 |
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| Summary: | The challenge of bankruptcy prediction, critical for averting financial sector losses, is amplified by the prevalence of imbalanced datasets, which often skew prediction models. Addressing this, our study introduces the innovative hybrid model XGBoost+ANN, designed to leverage the strengths of both ensemble learning and artificial neural networks. This model integrates a comprehensive set of features with parameters optimized through genetic algorithms, eschewing traditional feature selection approaches. Our research focuses on an unbalanced dataset of Polish companies and reveals that the XGBoost+ANN model, in particular, exhibits outstanding performance. Optimized using genetic algorithms and without feature selection, this model achieved the highest AUC (0.958), sensitivity (0.752), and accuracy (0.983) scores, surpassing other models in our study. This remarkable outperformance, along with the robust results, marks a substantial advancement in the field of bankruptcy prediction. It underscores the efficacy of our approach in addressing the persistent challenge of data imbalance, offering a more reliable and accurate solution for financial risk assessment. |
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