A Framework for Business Failure Prediction

Islek I., Atakli I. M., Öğüdücü Ş.

16th International Conference on Artificial Intelligence and Soft Computing (ICAISC), Zakopane, Poland, 11 - 15 June 2017, vol.10246, pp.74-83 identifier identifier

  • Publication Type: Conference Paper / Full Text
  • Volume: 10246
  • Doi Number: 10.1007/978-3-319-59060-8_8
  • City: Zakopane
  • Country: Poland
  • Page Numbers: pp.74-83
  • Istanbul Technical University Affiliated: Yes


Business failure prediction systems help predict financial failures before they actually happen and provide an early warning for enterprises. Using machine learning techniques, instead of traditional statistical models, has brought a considerable increase in performance into the area of business failure prediction. This paper presents a framework for predicting business failures by using different machine learning techniques. We, also, implemented a novel model for business failure prediction based on NARX (nonlinear autoregressive network with exogenous inputs) feedback neural network to be included into this framework which is a recurrent dynamic network with feedback connections. Detailed experiments are conducted to compare the performance of these approaches. Especially, for the long-term business failure predictions, there are no other papers investigating the performance of NARX. To the best of our knowledge, this is the first time NARX algorithm is applied for long-term business failure prediction.