Warranty Data Analysis: A Review

Warranty claims and supplementary data contain useful information about product quality and reliability. Analysing such data can therefore be of benefit to manufacturers in identifying early warnings of abnormalities in their products, providing useful information about failure modes to aid design modification, estimating product reliability for deciding on warranty policy and forecasting future warranty claims needed for preparing fiscal plans. In the last two decades, considerable research has been conducted in warranty data analysis (WDA) from several different perspectives. This article attempts to summarise and review the research and developments in WDA with emphasis on models, methods and applications. It concludes with a brief discussion on current practices and possible future trends in WDA

Assessing the Currency Crises in Turkey

This study presents the significance of the currency crises, discusses the related literature and applies a model of economic vulnerability to Turkey during 1985Q2-2004Q2. The common approach in currency crisis literature is to focus on the performance of thresholds for a set of early warning indicators. Following the explanation of “Index of Speculative Pressure” (ISP), Granger causes of the ISP is discussed. The study shows that, current account/ GDP ratio, M2/international reserves ratio, real credit growth and current account/foreign direct investment ratio are Granger causes of the ISP at 1% level. Then by using Vector Auto Regression (VAR) model, the ISP index is forecasted. The study shows that the combination of VAR(1)+VAR(2)+VAR(5) models generate relatively better forecast values than all other single models. Finally the study estimates dynamic probit and logit models by using maximum likelihood to predict currency crises. It shows that logit model gives a better performance than the probit, for a better prediction of the probabilities of the Turkish currency crises. The most important contribution of this study is to show that the logit model has a very high performance in the prediction of Turkish currency crises. It can be used to foresee forthcoming currency crises. Also the forecast of the ISP (as a level) is giving very successful results. It is observed that the ISP and forecasted ISP values are almost moving together or very close to each other.Currency Crises, Speculative Pressure, Exchange Rates, Financial Crises

Financial-distress prediction of Islamic banks using tree-based stochastic techniques

Purpose Financial distress is a socially and economically important problem that affects companies the world over. Having the power to better understand – and hence aid businesses from failing, has the potential to save not only the company, but also potentially prevent economies from sustained downturn. Although Islamic banks constitute a fraction of total banking assets, their importance have been substantially increasing, as their asset growth rate has surpassed that of conventional banks in recent years. The paper aims to discuss these issues. Design/methodology/approach This paper uses a data set comprising 101 international publicly listed Islamic banks to work on advancing financial distress prediction (FDP) by utilising cutting-edge stochastic models, namely decision trees, stochastic gradient boosting and random forests. The most important variables pertaining to forecasting corporate failure are determined from an initial set of 18 variables. Findings The results indicate that the “Working Capital/Total Assets” ratio is the most crucial variable relating to forecasting financial distress using both the traditional “Altman Z-Score” and the “Altman Z-Score for Service Firms” methods. However, using the “Standardised Profits” method, the “Return on Revenue” ratio was found to be the most important variable. This provides empirical evidence to support the recommendations made by Basel Accords for assessing a bank’s capital risks, specifically in relation to the application to Islamic banking. Originality/value These findings provide a valuable addition to the limited literature surrounding Islamic banking in general, and FDP pertaining to Islamic banking in particular, by showcasing the most pertinent variables in forecasting financial distress so that appropriate proactive actions can be taken. </jats:sec

The role of capital, liquidity and credit growth in financial crises in Latin America and East Asia

We construct a dataset of bank capital adequacy and liquidity to test their relationships to crises in Asia and Latin America. Event studies, logit and ROC estimations suggest these variables are valuable leading indicators of crises. They can be used to improve Early Warning System design although there are trade-offs between model simplicity, which implies less monitoring costs and complexity which may improve accuracy. There are significant differences between the regions so pooling assumptions are unsound. AUCs show that capital and/or liquidity can be used in a parsimonious model without substantial loss in crisis predictive accuracy. We find no direct role for credit growth in either region. Our results have implications for Asian and Latin American financial regulators concerned with the impacts of Basel III on their banking systems.This work is funded under ESRC Grant No. PTA – 053 – 27 – 0002, entitled “An Investigation into the Causes of Banking Crises and Early Warning System Design”

A Literature Review on Predictive Monitoring of Business Processes

Oleme läbi vaadanud mitmesuguseid ennetava jälgimise meetodeid äriprotsessides. Prognoositavate seirete eesmärk on aidata ettevõtetel oma eesmärke saavutada, aidata neil valida õige ärimudel, prognoosida tulemusi ja aega ning muuta äriprotsessid riskantsemaks. Antud väitekirjaga oleme hoolikalt kogunud ja üksikasjalikult läbi vaadanud selle väitekirja teemal oleva kirjanduse. Kirjandusuuringu tulemustest ja tähelepanekutest lähtuvalt oleme hoolikalt kavandanud ennetava jälgimisraamistiku. Raamistik on juhendiks ettevõtetele ja teadlastele, teadustöötajatele, kes uurivad selles valdkonnas ja ettevõtetele, kes soovivad neid tehnikaid oma valdkonnas rakendada.The goal of predictive monitoring is to help the business achieve their goals, help them take the right business path, predict outcomes, estimate delivery time, and make business processes risk aware. In this thesis, we have carefully collected and reviewed in detail all literature which falls in this process mining category. The objective of the thesis is to design a Predictive Monitoring Framework and classify the different predictive monitoring techniques. The framework acts as a guide for researchers and businesses. Researchers who are investigating in this field and businesses who want to apply these techniques in their respective field

Economic Forecasting: Some Lessons from Recent Research

We describe a general theoretical framework against which recent results in economic forecasting can be judged, including explanations for the findings of forecasting competitions, the prevalence of forecast failure, and the role of causal variables. We compare this framework to a previous formulation which was silent on the very issues of most concern to the forecaster, then describe ten aspects which our approach illuminates, and draw out their implications for model selection. Finally, we discuss ten areas where research is needed to clarify empirical findings that still lack theoretical explanations.

Economic Forecasting: Some Lessons from Recent Research

This paper describes some recent advances and contributions to our understanding of economic forecasting. The framework we develop helps explain the findings of forecasting competitions and the prevalence of forecast failure. It constitutes a general theoretical background against which recent results can be judged. We compare this framework to a previous formulation, which was silent on the very issues of most concern to the forecaster. We describe a number of aspects which it illuminates, and draw out the implications for model selection. Finally, we discuss the areas where research remains needed to clarify empirical findings which lack theoretical explanations.