A Methodological Review of Financial Distress Prediction Techniques
Abstract
In the recent times, cases of companies going into fi nancial crisis have been increased to a
great extent. The legal procedure to deal with these distress situations was limited. In 2016,
Indian government introduced “Indian Bankruptcy Code, 2016” to deal with the fi nancial
distress of the individuals, partnerships and corporates. But, If there will be an EWS (Early
Warning Systems) in place that can predict the possibility of going into fi nancial distress well
in advance. This will help fi nancial decision makers in timely resolution of the concerned
areas to prevent the distress in fi rst place. This paper aims for a methodological review of
the literature of the prediction techniques that have been used widely for Financial Distress
Prediction.
Keywords: Financial Distress, Prediction techniques, AI (Artifi cial Intelligence),
EWS (Early Warning Systems), Financial health, Crisis