Abstract

In the context of financial risk assessment, the ability to predict bankruptcy has considerable significance in ensuring the stability of economic systems. One of the enduring challenges in this specific domain is imbalanced datasets, where the frequency of cases reflecting bankruptcy is much lower compared to instances representing non-bankrupt scenarios. The objective of this research is to investigate the use of the Synthetic Minority Over-sampling Technique (SMOTE) in combination with the CatBoost classification algorithm. The focus is on achieving data equalisation and enhancing bankruptcy prediction. The use of the Synthetic Minority Over-sampling Technique (SMOTE) algorithm in combination with the CatBoost algorithm efficiently leverages the distinct qualities and benefits provided by each methodology. The Synthetic Minority Over-sampling Technique (SMOTE) is a technique designed to address the problem of class imbalance by creating synthetic samples for the minority class. This social strategy improves the model's capacity to gather and acquire patterns from the class that is not well represented. The CatBoost algorithm, which accesses categorical feature handling skills with an efficient boosting methodology, is used to analyse the enlarged dataset and develop a robust prediction model for the task of bankruptcy detection. The main aim of this study is to employ the Catboost classifier in order to classify Bankruptcy detection. The precision will be achieved by the use of SMOTE Analysis, a technique particularly designed to address the issue of unbalanced data. The research study will use the classification report and the confusion matrix as evaluation metrics to assess the anticipated accuracy level of 97 percent. The proposed research would use visual tools to analyse and show the results.