Open AccessThe Impact of Methodology on the Effectiveness of Bankruptcy Modeling
Author(s) -
Michal Karas,
Mária Režňáková
Publication year - 2022
Publication title -
international journal of economics and statistics
Language(s) - English
Resource type - Journals
ISSN - 2309-0685
DOI - 10.46300/9103.2022.10.4
Subject(s) - bankruptcy , nonparametric statistics , parametric statistics , yield (engineering) , conviction , czech , parametric model , econometrics , bankruptcy prediction , selection (genetic algorithm) , computer science , reflection (computer programming) , artificial intelligence , actuarial science , statistics , mathematics , economics , finance , political science , law , linguistics , materials science , philosophy , metallurgy , programming language
The prevailing opinion in literature is that the accuracy of bankruptcy models cannot be appreciably improved by the choice of classification algorithm. A reflection of this conviction is the frequent usage of parametric methods. However, the nature of financial data places a limitation on the accuracy of these methods. An analysis of 1908 Czech industrial enterprises from 2004 to 2011 reveals that a nonparametric method, if used for the selection of model variables as well as the actual classification, can yield significantly better results than the traditional parametric approach.