{"title":"Ensemble learning algorithms based on easyensemble sampling for financial distress prediction","authors":"Wei Liu, Yoshihisa Suzuki, Shuyi Du","doi":"10.1007/s10479-025-06494-y","DOIUrl":null,"url":null,"abstract":"<div><p>Ensemble learning algorithms show good forecasting performances for financial distress in many studies. Despite considering the feature selection and feature importance procedures, most overlook imbalanced data handling. This study proposes the Easyensemble method based on undersampling and combines it with ensemble learning models to predict financial distress. The results show that Easyensemble sampling presents better forecasting performance than SMOTE sampling. We subsequently conduct Permutation Importance (PIMP), Recursive Feature Elimination (RFE), and partial dependence plots, and the experimental results show that the feature selection procedure can effectively reduce the number of indicators without affecting the prediction accuracy, improve the prediction efficiency as well as save processing time. In addition, the indicators from profitability, cash flow, solvency, and structural ratios are essential in predicting financial distress.</p></div>","PeriodicalId":8215,"journal":{"name":"Annals of Operations Research","volume":"346 3","pages":"2141 - 2172"},"PeriodicalIF":4.4000,"publicationDate":"2025-02-18","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"https://link.springer.com/content/pdf/10.1007/s10479-025-06494-y.pdf","citationCount":"0","resultStr":null,"platform":"Semanticscholar","paperid":null,"PeriodicalName":"Annals of Operations Research","FirstCategoryId":"91","ListUrlMain":"https://link.springer.com/article/10.1007/s10479-025-06494-y","RegionNum":3,"RegionCategory":"管理学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":null,"EPubDate":"","PubModel":"","JCR":"Q1","JCRName":"OPERATIONS RESEARCH & MANAGEMENT SCIENCE","Score":null,"Total":0}
引用次数: 0
Abstract
Ensemble learning algorithms show good forecasting performances for financial distress in many studies. Despite considering the feature selection and feature importance procedures, most overlook imbalanced data handling. This study proposes the Easyensemble method based on undersampling and combines it with ensemble learning models to predict financial distress. The results show that Easyensemble sampling presents better forecasting performance than SMOTE sampling. We subsequently conduct Permutation Importance (PIMP), Recursive Feature Elimination (RFE), and partial dependence plots, and the experimental results show that the feature selection procedure can effectively reduce the number of indicators without affecting the prediction accuracy, improve the prediction efficiency as well as save processing time. In addition, the indicators from profitability, cash flow, solvency, and structural ratios are essential in predicting financial distress.
期刊介绍:
The Annals of Operations Research publishes peer-reviewed original articles dealing with key aspects of operations research, including theory, practice, and computation. The journal publishes full-length research articles, short notes, expositions and surveys, reports on computational studies, and case studies that present new and innovative practical applications.
In addition to regular issues, the journal publishes periodic special volumes that focus on defined fields of operations research, ranging from the highly theoretical to the algorithmic and the applied. These volumes have one or more Guest Editors who are responsible for collecting the papers and overseeing the refereeing process.