Predicting Bank Failures: A Synthesis of Literature and Directions for Future Research

Risk management has been a topic of great interest to Michael McAleer. Even as recent 2020, his paper on risk for COVID-19 was published. In memory, this article is focused bankruptcy in financial firms. For institutions particular, banks are considered special, given that they perform functions unique. Risks banking arise from both internal and external factors. The GFC underlined the need comprehensive management, researchers since then have working towards fulfilling need. Similarly, central across world begun periodic stress-testing banks’ ability withstand shocks. This investigates machine-learning statistical techniques used literature bank failure prediction. study finds though considerable progress made using advanced computational techniques, complex nature risk, predict failures limited. Machine-learning-based models increasingly becoming popular due their significant predictive ability. also suggests directions future research.