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Differential Evolution Trained Fuzzy Cognitive Map: An Application to Modeling Efficiency in Banking

  • Gutha Jaya Krishna
  • Meesala Smruthi
  • Vadlamani RaviEmail author
  • Bhamidipati Shandilya
Conference paper
Part of the Advances in Intelligent Systems and Computing book series (AISC, volume 941)

Abstract

In this work, we developed a Differential Evolution (DE) trained Fuzzy Cognitive Map (FCM) for predicting the bank efficiency. We developed two modes of training namely (i) sequential and (ii) batch modes. We compared the DE trained FCM models with the conventional Hebbian training in both modes. We employed Mean Absolute Percentage Error (MAPE) as an error measure while predicting the efficiency from Return on Assets (ROA), Return on Equity (ROE), Profit Margin (PM), Utilization of Assets (UA), and Expenses Ratio (ER). We employed 5x2-fold cross-validation framework. In the first case i.e. sequential mode of training, the DE trained FCM statistically outperformed the Hebbian trained FCM and in the second case i.e. batch mode of training, DE trained FCM is statistically the same as the Hebbian trained FCM. To break the tie in the batch mode, the training time is compared where DE trained FCM turned to be 19% faster than the Hebbian trained FCM. The proposed model can be applied to solving similar banking and insurance problems.

Keywords

Bank efficiency prediction Financial ratios Differential Evolution Fuzzy Cognitive Map Hebbian learning 

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Copyright information

© Springer Nature Switzerland AG 2020

Authors and Affiliations

  • Gutha Jaya Krishna
    • 1
    • 3
  • Meesala Smruthi
    • 2
  • Vadlamani Ravi
    • 3
    Email author
  • Bhamidipati Shandilya
    • 4
  1. 1.School of Computer and Information SciencesUniversity of HyderabadHyderabadIndia
  2. 2.Department of Electrical and Electronics EngineeringBirla Institute of Technology and Science PilaniHyderabadIndia
  3. 3.Center of Excellence in AnalyticsInstitute for Development and Research in Banking TechnologyHyderabadIndia
  4. 4.Institute for Development and Research in Banking TechnologyHyderabadIndia

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