Financial failure prediction using artificial neural network and an emprical application

Creditors, invertors, stockholders and managers interest in using financial ratios to predict financial failure. Multivarite discriminant analysis is one of the most of popular statistical technique used to predict financial failure. But multivarite discriminant analysis has some restrictive assumptions and it may be a valid technique only under these assumtions. Artificial Neural Networks is an alternative technology to predict financial failure. Comparision of the nural network and discriminant analysis in context of predict financial failure, neural networks provided better results then multivarite discriminant analysis.KEYWORDS : 1. Financial failure 2. Artificial Neural Networks