Multistage classification by using logistic regression and neural networks for assessment of financial condition of company

The paper presents the new approach to the automatic assessment of the financial condition of the company. We develop the computerized classification system applying WOE representation of data, logistic regression and Support Vector Machine (SVM) used as the final classifier. The applied method is a combination of a classical binary scoring approach and Support Vector Machine classification. The application of this method to the assessment of the financial condition of companies, classified into five classes, has shown its superiority with respect to classical approaches.

► We presented 2-step assessment of insolvency risk of company.
► We proposed WOE representation of variables.
► We developed 2-stage classification of financial data.
► We presented results of experiments for 2217 companies.