Yu Cheng, Qin Yang, Liyang Wang, Ao Xiang, Jingyu Zhang
{"title":"Research on Credit Risk Early Warning Model of Commercial Banks Based on Neural Network Algorithm","authors":"Yu Cheng, Qin Yang, Liyang Wang, Ao Xiang, Jingyu Zhang","doi":"arxiv-2405.10762","DOIUrl":null,"url":null,"abstract":"In the realm of globalized financial markets, commercial banks are confronted\nwith an escalating magnitude of credit risk, thereby imposing heightened\nrequisites upon the security of bank assets and financial stability. This study\nharnesses advanced neural network techniques, notably the Backpropagation (BP)\nneural network, to pioneer a novel model for preempting credit risk in\ncommercial banks. The discourse initially scrutinizes conventional financial\nrisk preemptive models, such as ARMA, ARCH, and Logistic regression models,\ncritically analyzing their real-world applications. Subsequently, the\nexposition elaborates on the construction process of the BP neural network\nmodel, encompassing network architecture design, activation function selection,\nparameter initialization, and objective function construction. Through\ncomparative analysis, the superiority of neural network models in preempting\ncredit risk in commercial banks is elucidated. The experimental segment selects\nspecific bank data, validating the model's predictive accuracy and\npracticality. Research findings evince that this model efficaciously enhances\nthe foresight and precision of credit risk management.","PeriodicalId":501128,"journal":{"name":"arXiv - QuantFin - Risk Management","volume":"68 1","pages":""},"PeriodicalIF":0.0000,"publicationDate":"2024-05-17","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":"0","resultStr":null,"platform":"Semanticscholar","paperid":null,"PeriodicalName":"arXiv - QuantFin - Risk Management","FirstCategoryId":"1085","ListUrlMain":"https://doi.org/arxiv-2405.10762","RegionNum":0,"RegionCategory":null,"ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":null,"EPubDate":"","PubModel":"","JCR":"","JCRName":"","Score":null,"Total":0}
引用次数: 0
Abstract
In the realm of globalized financial markets, commercial banks are confronted
with an escalating magnitude of credit risk, thereby imposing heightened
requisites upon the security of bank assets and financial stability. This study
harnesses advanced neural network techniques, notably the Backpropagation (BP)
neural network, to pioneer a novel model for preempting credit risk in
commercial banks. The discourse initially scrutinizes conventional financial
risk preemptive models, such as ARMA, ARCH, and Logistic regression models,
critically analyzing their real-world applications. Subsequently, the
exposition elaborates on the construction process of the BP neural network
model, encompassing network architecture design, activation function selection,
parameter initialization, and objective function construction. Through
comparative analysis, the superiority of neural network models in preempting
credit risk in commercial banks is elucidated. The experimental segment selects
specific bank data, validating the model's predictive accuracy and
practicality. Research findings evince that this model efficaciously enhances
the foresight and precision of credit risk management.