A Study on Classification Models for Predicting Bankruptcy Based on XAI


KIPS Transactions on Software and Data Engineering, Vol. 12, No. 8, pp. 333-340, Aug. 2023
https://doi.org/10.3745/KTSDE.2023.12.8.333,   PDF Download:  
Keywords: Big data, Classification Model, Explainable AI, Bagging, Boosting, Ensemble
Abstract

Efficient prediction of corporate bankruptcy is an important part of making appropriate lending decisions for financial institutions and reducing loan default rates. In many studies, classification models using artificial intelligence technology have been used. In the financial industry, even if the performance of the new predictive models is excellent, it should be accompanied by an intuitive explanation of the basis on which the result was determined. Recently, the US, EU, and South Korea have commonly presented the right to request explanations of algorithms, so transparency in the use of AI in the financial sector must be secured. In this paper, an artificial intelligence-based interpretable classification prediction model was proposed using corporate bankruptcy data that was open to the outside world. First, data preprocessing, 5-fold cross-validation, etc. were performed, and classification performance was compared through optimization of 10 supervised learning classification models such as logistic regression, SVM, XGBoost, and LightGBM. As a result, LightGBM was confirmed as the best performance model, and SHAP, an explainable artificial intelligence technique, was applied to provide a post-explanation of the bankruptcy prediction process.


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Cite this article
[IEEE Style]
J. Kim and N. Moon, "A Study on Classification Models for Predicting Bankruptcy Based on XAI," KIPS Transactions on Software and Data Engineering, vol. 12, no. 8, pp. 333-340, 2023. DOI: https://doi.org/10.3745/KTSDE.2023.12.8.333.

[ACM Style]
Jihong Kim and Nammee Moon. 2023. A Study on Classification Models for Predicting Bankruptcy Based on XAI. KIPS Transactions on Software and Data Engineering, 12, 8, (2023), 333-340. DOI: https://doi.org/10.3745/KTSDE.2023.12.8.333.