Bankruptcy prediction based on financial ratios using Jordan Recurrent Neural Networks: a case study in Polish companies

Complexity of bankruptcy causes the accurate models of bankruptcy prediction difficult to be achieved. Various prediction models have been developed to improve the accuracy of bankruptcy predictions. Machine learning has been widely used to predict because of its adaptive capabilities. Artificial Neural Networks (ANN) is one of machine learning which proved able to complete inference tasks such as prediction and classification especially in data mining. In this paper, we propose the implementation of Jordan Recurrent Neural Networks (JRNN) to classify and predict corporate bankruptcy based on financial ratios. Feedback interconnection in JRNN enable to make the network keep important information well allowing the network to work more effectively. The result analysis showed that JRNN works very well in bankruptcy prediction with average success rate of 81.3785%.