Random forests-based early warning system for bank failures

Katsuyuki Tanaka, Takuji Kinkyo and Shigeyuki Hamori

Economics Letters, 2016, vol. 148, issue C, 118-121

Abstract: This paper introduces a novel random forests-based early warning system for predicting bank failures. We apply this method to the analysis of bank-level financial statements, in order to find patterns that identify banks in danger of failing. The experimental results show that our method outperforms conventional methods in terms of prediction accuracy.

Keywords: Random forests; Early warning system; Bank failure (search for similar items in EconPapers)
JEL-codes: C5 G1 (search for similar items in EconPapers)
Date: 2016
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Citations: View citations in EconPapers (49)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecolet:v:148:y:2016:i:c:p:118-121

DOI: 10.1016/j.econlet.2016.09.024

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