Fuzzy logic and financial risk. A proposed classificationof financial risk to the cooperative sector

Jaime Fabián Díaz Córdova (), Edisson Coba Molina and Paúl Navarrete López
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Jaime Fabián Díaz Córdova: Universidad Técnica de Ambato, Ecuador
Edisson Coba Molina: Universidad Técnica de Ambato, Ecuador
Paúl Navarrete López: Universidad Técnica de Ambato, Ecuador

Contaduría y Administración, 2017, vol. 62, issue 5, 33-34

Abstract: Applying fuzzy logic to financial indicators is not a well disseminated proposal in the accounting field. This methodology allows observing the results of financial ratios with a broader perspective, showing neither completely true nor completely false results, since they can take an undetermined truthfulness value within a set of values, applying the fuzzy logic theory. The objective of this work is to introduce the reader to the application of fuzzy logic on financial risk indicators, using the ratios of one of the sector one cooperatives of Ecuador, and thus validate the level of relevance of this indicator when compared to the standardized objective of the CAMEL model and its risk rating. To apply this theory, linguistic variables were used, the ranges of which were evaluated in 0–1 scales. It was determined that the fuzzy methodology, applied to financial risks, presents a greater level of relevance toward a good credit rating, ensuring a low level of risk and a very good solvency. However, in periods of low economic activity it would stagnate in this level due to the increased risk.

Keywords: Fuzzy logic; Financial indicators; Xfuzzy environment; Risk rating (search for similar items in EconPapers)
JEL-codes: C15 C44 C65 (search for similar items in EconPapers)
Date: 2017
References: View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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