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Fuzzy logic and financial risk. A proposed classificationof financial risk to the cooperative sector

Author

Listed:
  • Jaime Fabián Díaz Córdova

    (Universidad Técnica de Ambato, Ecuador)

  • Edisson Coba Molina

    (Universidad Técnica de Ambato, Ecuador)

  • Paúl Navarrete López

    (Universidad Técnica de Ambato, Ecuador)

Abstract

Applying fuzzy logic to financial indicators is not a well disseminated proposal in the accounting field. This methodology allows observing the results of financial ratios with a broader perspective, showing neither completely true nor completely false results, since they can take an undetermined truthfulness value within a set of values, applying the fuzzy logic theory. The objective of this work is to introduce the reader to the application of fuzzy logic on financial risk indicators, using the ratios of one of the sector one cooperatives of Ecuador, and thus validate the level of relevance of this indicator when compared to the standardized objective of the CAMEL model and its risk rating. To apply this theory, linguistic variables were used, the ranges of which were evaluated in 0–1 scales. It was determined that the fuzzy methodology, applied to financial risks, presents a greater level of relevance toward a good credit rating, ensuring a low level of risk and a very good solvency. However, in periods of low economic activity it would stagnate in this level due to the increased risk.

Suggested Citation

  • Jaime Fabián Díaz Córdova & Edisson Coba Molina & Paúl Navarrete López, 2017. "Fuzzy logic and financial risk. A proposed classificationof financial risk to the cooperative sector," Contaduría y Administración, Accounting and Management, vol. 62(5), pages 33-34, Diciembre.
    • Handle: RePEc:nax:conyad:v:62:y:2017:i:5:p:33-34
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    Citations

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    Cited by:

    1. M. J. Hermoso-Orzáez & J. Garzón-Moreno, 2022. "Risk management methodology in the supply chain: a case study applied," Annals of Operations Research, Springer, vol. 313(2), pages 1051-1075, June.
    2. Enriqueta Mancilla-Rendón & Carmen Lozano & Enrique Torres-Esteva, 2021. "Fuzzy Governance Model," Mathematics, MDPI, vol. 9(5), pages 1-16, February.
    3. Hoang Viet Long & Haifa Bin Jebreen & Y. Chalco-Cano, 2020. "A New Continuous-Discrete Fuzzy Model and Its Application in Finance," Mathematics, MDPI, vol. 8(10), pages 1-15, October.

    More about this item

    Keywords

    Fuzzy logic; Financial indicators; Xfuzzy environment; Risk rating;
    All these keywords.

    JEL classification:

    • C15 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Statistical Simulation Methods: General
    • C44 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: Special Topics - - - Operations Research; Statistical Decision Theory
    • C65 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Miscellaneous Mathematical Tools

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