The Graph Theoretical Approach to Bankruptcy Prediction

Abstract

This paper examines the applicability of the graph theoretical approach to bankruptcy prediction. Various statistical techniques have been used to predict bankruptcy including univariate analysis, multivariate discrimination analysis, logit model, probit model, and neural networks. This paper employs the graph theoretical approach to bankruptcy prediction. The empirical findings confirms the validity of the proposed method for predicting bankruptcy. The proposed method in this paper provides an insight into the development of a new approach to the assessment of financial solvency of a company. This paper contributes to the literature by introducing a new approach to bankruptcy prediction.