Using neural network ensembles for bankruptcy prediction and credit scoring

Chih Fong Tsai, Jhen Wei Wu

Research output: Contribution to journalArticlepeer-review

324 Scopus citations


Bankruptcy prediction and credit scoring have long been regarded as critical topics and have been studied extensively in the accounting and finance literature. Artificial intelligence and machine learning techniques have been used to solve these financial decision-making problems. The multilayer perceptron (MLP) network trained by the back-propagation learning algorithm is the mostly used technique for financial decision-making problems. In addition, it is usually superior to other traditional statistical models. Recent studies suggest combining multiple classifiers (or classifier ensembles) should be better than single classifiers. However, the performance of multiple classifiers in bankruptcy prediction and credit scoring is not fully understood. In this paper, we investigate the performance of a single classifier as the baseline classifier to compare with multiple classifiers and diversified multiple classifiers by using neural networks based on three datasets. By comparing with the single classifier as the benchmark in terms of average prediction accuracy, the multiple classifiers only perform better in one of the three datasets. The diversified multiple classifiers trained by not only different classifier parameters but also different sets of training data perform worse in all datasets. However, for the Type I and Type II errors, there is no exact winner. We suggest that it is better to consider these three classifier architectures to make the optimal financial decision.

Original languageEnglish
Pages (from-to)2639-2649
Number of pages11
JournalExpert Systems with Applications
Issue number4
StatePublished - May 2008


  • Bankruptcy prediction
  • Classifier ensembles
  • Credit scoring
  • Neural networks


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