LEVERAGING AI TO TACKLE FINANCIAL DISTRESS: A COMPREHENSIVE APPROACH
Keywords:
Cash Flow Prediction, Liquidity Management, Financial Distress Prediction, Debt Restructuring, Financial Ratios, Federated LearningAbstract
Artificial Intelligence (AI) has emerged as a powerful tool in predicting and mitigating financial distress for individuals and businesses. This article explores various AI techniques employed in financial management, including early warning systems, liquidity management, debt restructuring, personalized financial planning, and continuous monitoring strategies. AI-powered models have demonstrated remarkable accuracy in predicting financial distress, with some achieving up to 86.4% accuracy in corporate financial distress prediction. These systems utilize advanced algorithms, such as Long Short-Term Memory (LSTM) networks and anomaly detection techniques, to analyze financial data and market indicators. The integration of AI has led to significant improvements in cash flow prediction, debt restructuring efficiency, and personalized financial advice. Innovative approaches, such as incorporating external data sources and federated learning, further enhance these AI systems' capabilities. While the potential of AI in financial distress management is substantial, the article also emphasizes the importance of human oversight and ethical considerations in implementing these technologies.
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