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Bankruptcy Prediction via Hybrid Resampling and Stacking Ensemble Techniques with Explainable Artificial Intelligence (XAI)-Driven Analysis

A new study from arXiv (2608.20343v1) presents a bankruptcy prediction framework using hybrid resampling and stacking ensembles with explainable AI, achieving the best minority-class detection with a GRU model and SMOTE-ENN, which reached a recall of 0.8627, G-mean of 0.8517, and ROC-AUC of 0.9431 on the Taiwanese Bankruptcy Prediction dataset. The framework reduced input features to 23 via consensus-based selection and identified leverage, profitability, solvency, and operational efficiency as key predictors via SHAP analysis.

read1 min views1 publishedAug 24, 2026

arXiv:2608.20343v1 Announce Type: new Abstract: This study develops and evaluates a bankruptcy prediction framework that integrates consensus-based feature selection, hybrid resampling, stacking ensembles, and explainable artificial intelligence to improve minority-class detection in severely imbalanced financial data. Using the Taiwanese Bankruptcy Prediction dataset from the UCI Machine Learning Repository, five feature-selection algorithms were first applied, and a consensus retention rule reduced the input space to 23 robust variables. The balanced training data were then generated using SVM-SMOTE, SMOTE-Tomek, and SMOTE-ENN. Five ensemble machine learning classifiers, namely gradient boosting, extreme gradient boosting, histogram-based gradient boosting, LightGBM, and AdaBoost, were compared with five deep learning models, including RNN, LSTM, GRU, DNN, and MLP. In addition, hybrid stacking ensembles combined the five machine learning classifiers as base learners with each deep learning model as a meta-learner. Model performance was assessed using accuracy, recall, specificity, G-mean, and ROC-AUC, while SHAP was used to explain feature contributions. The results show that resampling strategy materially shaped model behavior. SVM-SMOTE and SMOTE-Tomek favored accuracy and specificity, whereas SMOTE-ENN delivered stronger minority-class detection. Among standalone models, the GRU with SMOTE-ENN achieved the best overall predictive balance, with recall of 0.8627, G-mean of 0.8517, and ROC-AUC of 0.9431. Among stacking ensembles, SMOTE-ENN with (GB+XGB+HGB+LGBM+AB)+LSTM provided the strongest compromise between sensitivity and specificity. SHAP analysis identified leverage, profitability, solvency, and operational efficiency indicators as the most influential predictors of bankruptcy risk. These findings support more reliable and interpretable early warning systems for financially distressed firms.

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