Bankruptcy Prediction Model with Risk Factors using Fuzzy Logic Approach

Authors

  • Teoh Yeong Kin Faculty of Computer and Mathematical Sciences, Universiti Teknologi MARA, Perlis Branch, Arau Campus
  • Akmal Haziq Ahmad Aizam Faculty of Computer and Mathematical Sciences, Universiti Teknologi MARA, Perlis Branch, Arau Campus
  • Suzanawati Abu Hasan Faculty of Computer and Mathematical Sciences, Universiti Teknologi MARA, Perlis Branch, Arau Campus
  • Anas Fathul Ariffin Faculty of Computer and Mathematical Sciences, Universiti Teknologi MARA, Perlis Branch, Arau Campus
  • Norpah Mahat Faculty of Computer and Mathematical Sciences, Universiti Teknologi MARA, Perlis Branch, Arau Campus

DOI:

https://doi.org/10.24191/jcrinn.v6i2.220

Keywords:

bankruptcy prediction, fuzzy logic, risk factors, Fuzzy Inference System

Abstract

Forecasting bankruptcy remains crucial, especially during this pandemic. Managers, financial institutions, and government agencies rely on the information regarding an impending bankruptcy threat to make decisions. This paper developed a straightforward bankruptcy prediction model using the fuzzy logic approach for individuals and companies to evaluate their performance and analyse the tendency of getting bankrupt. A sample of 250 respondents from banks and financial firms were tested using the qualitative risk factors, namely, industrial risk, management risk, financial flexibility, credibility, competitiveness, and operational risk. This study provides a comprehensive analysis using the Fuzzy Inference System (FIS) editor in the MATLAB software, where the model's accuracy is compared to the actual results. The results show an accuracy rate of 99.20%, indicating that this approach can determine the likelihood of bankruptcy. The fuzzy logic approach can improve prediction accuracy while also guiding decision-makers in detecting and preventing possible financial crises in their early phases.

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Author Biography

Akmal Haziq Ahmad Aizam, Faculty of Computer and Mathematical Sciences, Universiti Teknologi MARA, Perlis Branch, Arau Campus

Faculty of Computer and Mathematical Sciences

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Published

2021-09-01

How to Cite

Teoh Yeong Kin, Ahmad Aizam, A. H., Abu Hasan, S., Fathul Ariffin, A. ., & Mahat, N. (2021). Bankruptcy Prediction Model with Risk Factors using Fuzzy Logic Approach. Journal of Computing Research and Innovation, 6(2), 102–110. https://doi.org/10.24191/jcrinn.v6i2.220

Issue

Section

General Computing

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