What is Explanatory Capacity of Artificial Neural Networks

Artificial neural Networks (ANNs) are a powerful technique for multivariate dependence analysis. Originally inspired by neuroscience, ANNs are becoming an increasingly attractive analytic tool for applications in the area of economics and finance due to the flexible solutions they offer. The purpose of this article is to present such important applications with an emphasis on recent research trends. The contributions are grouped as follows: ANNs (1) for prediction, (2) for classification and (3) for modelling. The chapter concludes with the future trends in the ANNs research in economics and finance.