Comparative Analysis between Statistical and Artificial Intelligence Models in Business Failure Prediction

A growing number of predicting corporate failure models has emerged since 60s. Economic and social consequences of business failure can be dramatic, thus it is not surprise that the issue has been of growing interest in academic research as well as in business context. The main purpose of this study is to compare the predictive ability of five developed models based on three statistical techniques (Discriminant Analysis, Logit and Probit) and two models based on Artificial Intelligence (Neural Networks and Rough Sets). The five models were employed to a dataset of 420 non-bankrupt firms and 125 bankrupt firms belonging to the textile and clothing industry, over the period 2003–09. Results show that all the models performed well, with an overall correct classification level higher than 90%, and a type II error always less than 2%. The type I error increases as we move away from the year prior to failure. Our models contribute to the discussion of corporate financial distress causes. Moreover it can be used to assist decisions of creditors, investors and auditors. Additionally, this research can be of great contribution to devisers of national economic policies that aim to reduce industrial unemployment.

Modern statistical models for forensic fingerprint examinations : a critical review

Over the last decade, the development of statistical models in support of forensic fingerprint identification has been the subject of increasing research attention, spurned on recently by commentators who claim that the scientific basis for fingerprint identification has not been adequately demonstrated. Such models are increasingly seen as useful tools in support of the fingerprint identification process within or in addition to the ACE-V framework. This paper provides a critical review of recent statistical models from both a practical and theoretical perspective. This includes analysis of models of two different methodologies: Probability of Random Correspondence (PRC) models that focus on calculating probabilities of the occurrence of fingerprint configurations for a given population, and Likelihood Ratio (LR) models which use analysis of corresponding features of fingerprints to derive a likelihood value representing the evidential weighting for a potential source.

Swain: Stata module to correct the SEM chi-square overidentification test in small sample sizes or complex models. Statistical Software Components S457617, Boston College Department of Economics.

Swain corrects the chi-square overidentification test (i.e., likelihood ratio test of fit) for structural equation models whethr with or without latent variables. The chi-square statistic is asymptotically correct; however, it does not behave as expected in small samples and/or when the model is complex (cf. Herzog, Boomsma, & Reinecke, 2007). Thus, particularly in situations where the ratio of sample size (n) to the number of parameters estimated (p) is relatively small (i.e., the p to n ratio is large), the chi-square test will tend to overreject correctly specified models. To obtain a closer approximation to the distribution of the chi-square statistic, Swain (1975) developed a correction; this scaling factor, which converges to 1 asymptotically, is multiplied with the chi-square statistic. The correction better approximates the chi-square distribution resulting in more appropriate Type 1 reject error rates (see Herzog & Boomsma, 2009; Herzog, et al., 2007).

Selecting statistical models to study the relationship between soybean yield and soil physical properties

Statistical models allow the representation of data sets and the estimation and/or prediction of the behavior of a given variable through its interaction with the other variables involved in a phenomenon. Among other different statistical models, are the autoregressive state-space models (ARSS) and the linear regression models (LR), which allow the quantification of the relationships among soil-plant-atmosphere system variables. To compare the quality of the ARSS and LR models for the modeling of the relationships between soybean yield and soil physical properties, Akaike's Information Criterion, which provides a coefficient for the selection of the best model, was used in this study. The data sets were sampled in a Rhodic Acrudox soil, along a spatial transect with 84 points spaced 3 m apart. At each sampling point, soybean samples were collected for yield quantification. At the same site, soil penetration resistance was also measured and soil samples were collected to measure soil bulk density in the 0-0.10 m and 0.10-0.20 m layers. Results showed autocorrelation and a cross correlation structure of soybean yield and soil penetration resistance data. Soil bulk density data, however, were only autocorrelated in the 0-0.10 m layer and not cross correlated with soybean yield. The results showed the higher efficiency of the autoregressive space-state models in relation to the equivalent simple and multiple linear regression models using Akaike's Information Criterion. The resulting values were comparatively lower than the values obtained by the regression models, for all combinations of explanatory variables.

Evaluation of statistical and geostatistical models of digital soil properties mapping in tropical mountain regions

Soil properties have an enormous impact on economic and environmental aspects of agricultural production. Quantitative relationships between soil properties and the factors that influence their variability are the basis of digital soil mapping. The predictive models of soil properties evaluated in this work are statistical (multiple linear regression-MLR) and geostatistical (ordinary kriging and co-kriging). The study was conducted in the municipality of Bom Jardim, RJ, using a soil database with 208 sampling points. Predictive models were evaluated for sand, silt and clay fractions, pH in water and organic carbon at six depths according to the specifications of the consortium of digital soil mapping at the global level (GlobalSoilMap). Continuous covariates and categorical predictors were used and their contributions to the model assessed. Only the environmental covariates elevation, aspect, stream power index (SPI), soil wetness index (SWI), normalized difference vegetation index (NDVI), and b3/b2 band ratio were significantly correlated with soil properties. The predictive models had a mean coefficient of determination of 0.21. Best results were obtained with the geostatistical predictive models, where the highest coefficient of determination 0.43 was associated with sand properties between 60 to 100 cm deep. The use of a sparse data set of soil properties for digital mapping can explain only part of the spatial variation of these properties. The results may be related to the sampling density and the quantity and quality of the environmental covariates and predictive models used.

Operational benefits and challenges of the use of fingerprint statistical models: a field study

Research projects aimed at proposing fingerprint statistical models based on the likelihood ratio framework have shown that low quality finger impressions left on crime scenes may have significant evidential value. These impressions are currently either not recovered, considered to be of no value when first analyzed by fingerprint examiners, or lead to inconclusive results when compared to control prints. There are growing concerns within the fingerprint community that recovering and examining these low quality impressions will result in a significant increase of the workload of fingerprint units and ultimately of the number of backlogged cases. This study was designed to measure the number of impressions currently not recovered or not considered for examination, and to assess the usefulness of these impressions in terms of the number of additional detections that would result from their examination.

Statistical Analysis and Numerics of Heat Exchanger Models

The identifiability of the parameters of a heat exchanger model without phase change was studied in this Master’s thesis using synthetically made data. A fast, two-step Markov chain Monte Carlo method (MCMC) was tested with a couple of case studies and a heat exchanger model. The two-step MCMC-method worked well and decreased the computation time compared to the traditional MCMC-method. The effect of measurement accuracy of certain control variables to the identifiability of parameters was also studied. The accuracy used did not seem to have a remarkable effect to the identifiability of parameters. The use of the posterior distribution of parameters in different heat exchanger geometries was studied. It would be computationally most efficient to use the same posterior distribution among different geometries in the optimisation of heat exchanger networks. According to the results, this was possible in the case when the frontal surface areas were the same among different geometries. In the other cases the same posterior distribution can be used for optimisation too, but that will give a wider predictive distribution as a result. For condensing surface heat exchangers the numerical stability of the simulation model was studied. As a result, a stable algorithm was developed.

Statistical Inference for Computable General Equilibrium Models with Application to a Model of the Moroccan Economy

We study the problem of measuring the uncertainty of CGE (or RBC)-type model simulations associated with parameter uncertainty. We describe two approaches for building confidence sets on model endogenous variables. The first one uses a standard Wald-type statistic. The second approach assumes that a confidence set (sampling or Bayesian) is available for the free parameters, from which confidence sets are derived by a projection technique. The latter has two advantages: first, confidence set validity is not affected by model nonlinearities; second, we can easily build simultaneous confidence intervals for an unlimited number of variables. We study conditions under which these confidence sets take the form of intervals and show they can be implemented using standard methods for solving CGE models. We present an application to a CGE model of the Moroccan economy to study the effects of policy-induced increases of transfers from Moroccan expatriates.

Projection-Based Statistical Inference in Linear Structural Models with Possibly Weak Instruments

It is well known that standard asymptotic theory is not valid or is extremely unreliable in models with identification problems or weak instruments [Dufour (1997, Econometrica), Staiger and Stock (1997, Econometrica), Wang and Zivot (1998, Econometrica), Stock and Wright (2000, Econometrica), Dufour and Jasiak (2001, International Economic Review)]. One possible way out consists here in using a variant of the Anderson-Rubin (1949, Ann. Math. Stat.) procedure. The latter, however, allows one to build exact tests and confidence sets only for the full vector of the coefficients of the endogenous explanatory variables in a structural equation, which in general does not allow for individual coefficients. This problem may in principle be overcome by using projection techniques [Dufour (1997, Econometrica), Dufour and Jasiak (2001, International Economic Review)]. AR-types are emphasized because they are robust to both weak instruments and instrument exclusion. However, these techniques can be implemented only by using costly numerical techniques. In this paper, we provide a complete analytic solution to the problem of building projection-based confidence sets from Anderson-Rubin-type confidence sets. The latter involves the geometric properties of “quadrics” and can be viewed as an extension of usual confidence intervals and ellipsoids. Only least squares techniques are required for building the confidence intervals. We also study by simulation how “conservative” projection-based confidence sets are. Finally, we illustrate the methods proposed by applying them to three different examples: the relationship between trade and growth in a cross-section of countries, returns to education, and a study of production functions in the U.S. economy.

A framework for translating English text into Malayalam using statistical models

A methodology for translating text from English into the Dravidian language, Malayalam using statistical models is discussed in this paper. The translator utilizes a monolingual Malayalam corpus and a bilingual English/Malayalam corpus in the training phase and generates automatically the Malayalam translation of an unseen English sentence. Various techniques to improve the alignment model by incorporating the morphological inputs into the bilingual corpus are discussed. Removing the insignificant alignments from the sentence pairs by this approach has ensured better training results. Pre-processing techniques like suffix separation from the Malayalam corpus and stop word elimination from the bilingual corpus also proved to be effective in producing better alignments. Difficulties in translation process that arise due to the structural difference between the English Malayalam pair is resolved in the decoding phase by applying the order conversion rules. The handcrafted rules designed for the suffix separation process which can be used as a guideline in implementing suffix separation in Malayalam language are also presented in this paper. Experiments conducted on a sample corpus have generated reasonably good Malayalam translations and the results are verified with F measure, BLEU and WER evaluation metrics

Parameter identification of structural dynamic models by inverse statistical analysis

Auf dem Gebiet der Strukturdynamik sind computergestützte Modellvalidierungstechniken inzwischen weit verbreitet. Dabei werden experimentelle Modaldaten, um ein numerisches Modell für weitere Analysen zu korrigieren. Gleichwohl repräsentiert das validierte Modell nur das dynamische Verhalten der getesteten Struktur. In der Realität gibt es wiederum viele Faktoren, die zwangsläufig zu variierenden Ergebnissen von Modaltests führen werden: Sich verändernde Umgebungsbedingungen während eines Tests, leicht unterschiedliche Testaufbauten, ein Test an einer nominell gleichen aber anderen Struktur (z.B. aus der Serienfertigung), etc. Damit eine stochastische Simulation durchgeführt werden kann, muss eine Reihe von Annahmen für die verwendeten Zufallsvariablengetroffen werden. Folglich bedarf es einer inversen Methode, die es ermöglicht ein stochastisches Modell aus experimentellen Modaldaten zu identifizieren. Die Arbeit beschreibt die Entwicklung eines parameter-basierten Ansatzes, um stochastische Simulationsmodelle auf dem Gebiet der Strukturdynamik zu identifizieren. Die entwickelte Methode beruht auf Sensitivitäten erster Ordnung, mit denen Parametermittelwerte und Kovarianzen des numerischen Modells aus stochastischen experimentellen Modaldaten bestimmt werden können.

Active Learning with Statistical Models

For many types of learners one can compute the statistically 'optimal' way to select data. We review how these techniques have been used with feedforward neural networks. We then show how the same principles may be used to select data for two alternative, statistically-based learning architectures: mixtures of Gaussians and locally weighted regression. While the techniques for neural networks are expensive and approximate, the techniques for mixtures of Gaussians and locally weighted regression are both efficient and accurate.

Statistical Models for Co-occurrence Data

Modeling and predicting co-occurrences of events is a fundamental problem of unsupervised learning. In this contribution we develop a statistical framework for analyzing co-occurrence data in a general setting where elementary observations are joint occurrences of pairs of abstract objects from two finite sets. The main challenge for statistical models in this context is to overcome the inherent data sparseness and to estimate the probabilities for pairs which were rarely observed or even unobserved in a given sample set. Moreover, it is often of considerable interest to extract grouping structure or to find a hierarchical data organization. A novel family of mixture models is proposed which explain the observed data by a finite number of shared aspects or clusters. This provides a common framework for statistical inference and structure discovery and also includes several recently proposed models as special cases. Adopting the maximum likelihood principle, EM algorithms are derived to fit the model parameters. We develop improved versions of EM which largely avoid overfitting problems and overcome the inherent locality of EM--based optimization. Among the broad variety of possible applications, e.g., in information retrieval, natural language processing, data mining, and computer vision, we have chosen document retrieval, the statistical analysis of noun/adjective co-occurrence and the unsupervised segmentation of textured images to test and evaluate the proposed algorithms.