Neural and wavelet network models for financial distress classification

This work analyzes the use of linear discriminant models, multi-layer perceptron neural networks and wavelet networks for corporate financial distress prediction. Although simple and easy to interpret, linear models require statistical assumptions that may be unrealistic. Neural networks are able to discriminate patterns that are not linearly separable, but the large number of parameters involved in a neural model often causes generalization problems. Wavelet networks are classification models that implement nonlinear discriminant surfaces as the superposition of dilated and translated versions of a single "mother wavelet" function. In this paper, an algorithm is proposed to select dilation and translation parameters that yield a wavelet network classifier with good parsimony characteristics. The models are compared in a case study involving failed and continuing British firms in the period 1997-2000. Problems associated with over-parameterized neural networks are illustrated and the Optimal Brain Damage pruning technique is employed to obtain a parsimonious neural model. The results, supported by a re-sampling study, show that both neural and wavelet networks may be a valid alternative to classical linear discriminant models.

A mixture of experts network structure construction algorithm for modelling and control

This paper introduces a new fast, effective and practical model structure construction algorithm for a mixture of experts network system utilising only process data. The algorithm is based on a novel forward constrained regression procedure. Given a full set of the experts as potential model bases, the structure construction algorithm, formed on the forward constrained regression procedure, selects the most significant model base one by one so as to minimise the overall system approximation error at each iteration, while the gate parameters in the mixture of experts network system are accordingly adjusted so as to satisfy the convex constraints required in the derivation of the forward constrained regression procedure. The procedure continues until a proper system model is constructed that utilises some or all of the experts. A pruning algorithm of the consequent mixture of experts network system is also derived to generate an overall parsimonious construction algorithm. Numerical examples are provided to demonstrate the effectiveness of the new algorithms. The mixture of experts network framework can be applied to a wide variety of applications ranging from multiple model controller synthesis to multi-sensor data fusion.

Perspex machine X: software development

The Perspex Machine arose from the unification of computation with geometry. We now report significant redevelopment of both a partial C compiler that generates perspex programs and of a Graphical User Interface (GUI). The compiler is constructed with standard compiler-generator tools and produces both an explicit parse tree for C and an Abstract Syntax Tree (AST) that is better suited to code generation. The GUI uses a hash table and a simpler software architecture to achieve an order of magnitude speed up in processing and, consequently, an order of magnitude increase in the number of perspexes that can be manipulated in real time (now 6,000). Two perspex-machine simulators are provided, one using trans-floating-point arithmetic and the other using transrational arithmetic. All of the software described here is available on the world wide web. The compiler generates code in the neural model of the perspex. At each branch point it uses a jumper to return control to the main fibre. This has the effect of pruning out an exponentially increasing number of branching fibres, thereby greatly increasing the efficiency of perspex programs as measured by the number of neurons required to implement an algorithm. The jumpers are placed at unit distance from the main fibre and form a geometrical structure analogous to a myelin sheath in a biological neuron. Both the perspex jumper-sheath and the biological myelin-sheath share the computational function of preventing cross-over of signals to neurons that lie close to an axon. This is an example of convergence driven by similar geometrical and computational constraints in perspex and biological neurons.

Manipulating resource allocation in plants

The distribution of nutrients and assimilates in different organs and tissues is in a constant state of flux throughout the growth and development of a plant. At key stages during the life cycle profound changes occur, and perhaps one of the most critical of these is during seed filling. By restricting the competition for reserves in Arabidopsis plants, the ability to manipulate seed size, seed weight, or seed content has been explored. Removal of secondary inflorescences and lateral branches resulted in a stimulation of elongation of the primary inflorescence and an increase in the distance between siliques. The pruning treatment also led to the development of longer and larger siliques that contained fewer, bigger seeds. This seems to be a consequence of a reduction in the number of ovules that develop and an increase in the fatty acid content of the seeds that mature. The data show that shoot architecture could have a substantial impact on the partitioning of reserves between vegetative and reproductive tissues and could be an important trait for selection in rapid phenotyping screens to optimize crop performance.

Advanced global optimisation for mission analysis and design

This report describes the analysis and development of novel tools for the global optimisation of relevant mission design problems. A taxonomy was created for mission design problems, and an empirical analysis of their optimisational complexity performed - it was demonstrated that the use of global optimisation was necessary on most classes and informed the selection of appropriate global algorithms. The selected algorithms were then applied to the di®erent problem classes: Di®erential Evolution was found to be the most e±cient. Considering the speci¯c problem of multiple gravity assist trajectory design, a search space pruning algorithm was developed that displays both polynomial time and space complexity. Empirically, this was shown to typically achieve search space reductions of greater than six orders of magnitude, thus reducing signi¯cantly the complexity of the subsequent optimisation. The algorithm was fully implemented in a software package that allows simple visualisation of high-dimensional search spaces, and e®ective optimisation over the reduced search bounds.

Unified framework for construction of rule based classification systems

Automatic generation of classification rules has been an increasingly popular technique in commercial applications such as Big Data analytics, rule based expert systems and decision making systems. However, a principal problem that arises with most methods for generation of classification rules is the overfit-ting of training data. When Big Data is dealt with, this may result in the generation of a large number of complex rules. This may not only increase computational cost but also lower the accuracy in predicting further unseen instances. This has led to the necessity of developing pruning methods for the simplification of rules. In addition, classification rules are used further to make predictions after the completion of their generation. As efficiency is concerned, it is expected to find the first rule that fires as soon as possible by searching through a rule set. Thus a suit-able structure is required to represent the rule set effectively. In this chapter, the authors introduce a unified framework for construction of rule based classification systems consisting of three operations on Big Data: rule generation, rule simplification and rule representation. The authors also review some existing methods and techniques used for each of the three operations and highlight their limitations. They introduce some novel methods and techniques developed by them recently. These methods and techniques are also discussed in comparison to existing ones with respect to efficient processing of Big Data.