BANKRUPTCY PREDICTION BASED ON INDEPENDENT COMPONENT ANALYSIS

Bankruptcy prediction is of great importance in financial statement analysis to minimize the risk of decision strategies. It attempts to separate distress companies from healthy ones according to some financial indicators. Since the real data usually contains irrelevant, redundant and correlated variables, it is necessary to reduce the dimensionality before performing the prediction. In this paper, a hybrid bankruptcy prediction algorithm is proposed based on independent component analysis and learning vector quantization. Experiments show the algorithm is effective for high dimensional bankruptcy data and therefore improve the capability of prediction.