Predicting Credit Ratings with a GA-MLP Hybrid

Abstract

The practical application of MLPs can be time-consuming due to the requirement for substantial modeler intervention in order to select appropriate inputs and parameters for the MLP. This chapter provides an example of how elements of the task of constructing a MLP can be automated by means of an evolutionary algorithm. A MLP whose inputs and structure are automatically selected using a genetic algorithm (GA) is developed for the purpose of predicting corporate bond-issuer ratings. The results suggest that the developed model can accurately predict the credit ratings assigned to bond issuers.