Machine learning can help spot bank distress – BoE paper

The Bank of England at night
The Bank of England

Machine learning (ML) models can help to build early-warning indicators of bank distress, researchers says in a new Bank of England working paper, published today (October 4).

In Predicting bank distress in the UK with machine learning, Joel Suss and Henry Treitel draw on confidential supervisory assessments of firm risk. They say this gives them an earlier insight into when a firm is deemed high risk. Other researchers have tended to focus on banks that have suffered “outright failure”.

They

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