Predicting financial distress of Chinese listed companies using a novel hybrid model framework with an imbalanced-data perspective

Tong Zhang and Zhichong Zhao

Journal of Risk Model Validation

Abstract: When predicting financial distress, an imbalanced data set of company data may cause overfitting to the majority class and lead to bad performance of the classifiers. The problem of classification with imbalanced data is, therefore, a realistic and critical issue. In this paper a novel hybrid model framework is constructed to solve the problem of predicting the financial distress of Chinese listed companies using imbalanced data. This framework is developed on the basis of logistic regression and backpropagation neural networks combined with the safe-level synthetic minority oversampling technique. We validate the model on a data set of Chinese listed companies and compare the proposed model with seven baseline ones. The results confirm that the proposed model has superior performance. Further, we find 19 important features that significantly influence the financial distress of Chinese listed companies.

References: Add references at CitEc
Citations:

Downloads: (external link)
https://www.risk.net/journal-of-risk-model-validat ... ced-data-perspective (text/html)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:rsk:journ5:7936571

Access Statistics for this article

More articles in Journal of Risk Model Validation from Journal of Risk Model Validation
Bibliographic data for series maintained by Thomas Paine ().