An intelligent credit forecasting system using supervised nonlinear dimensionality reductions

Shian Chang Huang, Chih Wei Lee, Min Jen Chang, Tung Kuang Wu

Research output: Contribution to journalArticle

Abstract

Kernel classifiers (such as support vector machines) have been successfully applied in numerous areas, and have demonstrated excellent performance. However, due to the high dimensionality and nonlinear distribution of financial input data in credit rating forecasting, finding a suitable low dimensional subspace by nonlinear dimensionality reductions is a key step to improve classifier performance. By integrating supervised kernel locality preserving projections (SKLPP) with kernel classifiers, this study develops a novel forecasting system for credit ratings. SKLPP is employed to gain a perfect approximation of data manifold and simultaneously preserve local within-class geometric structures according to prior class-label information. Empirical results indicate that, compared with other dimensionality reduction methods, the performance improvement owing to SKLPP is significant. Moreover, the proposed hybrid classifier outperforms other conventional classifiers.

Original languageEnglish
Pages (from-to)851-856
Number of pages6
JournalWorld Academy of Science, Engineering and Technology
Volume65
Publication statusPublished - 2010 May 1

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All Science Journal Classification (ASJC) codes

  • Engineering(all)

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