Risk Prediction Method of Village Banks Based on Equity Relationship

DOI

10.2991/978-94-6463-142-5_38How to use a DOI?

Keywords

illage bank; Machine learning; Risk early warning; Shareholding structure

Abstract

In the context of the simultaneous occurrence of financial risks in four rural banks in Henan, China, the public is worried about rural banks. Unlike big banks, which are “too big to fail”, rural banks face the problem of “too many to fail”. In this paper, an indicator system is established by selecting all the beneficial shareholders and their corresponding share data in the corporate equity of 82 banks. Based on the decision tree, KNN algorithm and RUSBoost algorithm, a risk early warning model for Henan rural banks is constructed, and it is verified that the three algorithms can be used to a certain extent. Two states of risk and normal were classified, and the RUSBoost model performed the best, with a false positive rate (FPR) value of 7% and a false positive rate (FPR) value of 0. The control group was introduced, and the equity data that was not processed by the index system was studied based on the same algorithm, and it was concluded that the index system had a good effect. This is the first attempt to identify the risk status of rural banks in my country by building an equity structure index system based on machine learning technology and will provide a prototype technical means and thinking direction for rural bank operators and regulatory authorities to provide timely early warning.

Copyright

© 2023 The Author(s)

Open Access

Open Access This chapter is licensed under the terms of the Creative Commons Attribution-NonCommercial 4.0 International License (http://creativecommons.org/licenses/by-nc/4.0/), which permits any noncommercial use, sharing, adaptation, distribution and reproduction in any medium or format, as long as you give appropriate credit to the original author(s) and the source, provide a link to the Creative Commons license and indicate if changes were made.

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TY  - CONF
AU  - Ailun Zhang
PY  - 2023
DA  - 2023/05/15
TI  - Risk Prediction Method of Village Banks Based on Equity Relationship
BT  - Proceedings of the 8th International Conference on Financial Innovation and Economic Development (ICFIED 2023)
PB  - Atlantis Press
SP  - 339
EP  - 349
SN  - 2352-5428
UR  - https://doi.org/10.2991/978-94-6463-142-5_38
DO  - 10.2991/978-94-6463-142-5_38
ID  - Zhang2023
ER  -