A new approach to K-nearest neighbors distance metrics on sovereign country credit rating

This study introduces feature importance K-nearest neighbors (FIKNN), an innovative adaptation of the K-nearest neighbors (KNN) algorithm tailored for classifying sovereign country credit ratings. The primary objective is to enhance KNN's predictive accuracy by integrating a feature importance mechanism derived from the random forest algorithm, which prioritizes significant features and reduces the impact of less relevant ones, refining the distance computation within KNN. Utilizing a comprehensive dataset of sovereign credit ratings, the performance of FIKNN was assessed against traditional KNN using various feature sets and bootstrap samples. The FIKNN model consistently outperformed the standard KNN by approximately 1% in classification accuracy, attributed to the weighted distance metric adjusting feature influence based on importance. Key findings indicate that FIKNN effectively manages datasets with varying feature relevance and demonstrates a positive correlation between feature diversity and model performance. Future research will explore other distance metrics and refine the feature importance weighting mechanism to broaden FIKNN's applicability in diverse predictive tasks. • The adapted version of the KNN algorithm, FIKNN, improves country credit ratings. • Feature importance weighting optimizes KNN's distance calculation. • FIKNN achieves 1% higher classification accuracy compared to traditional KNN. • The model performs exceptionally well with datasets of high feature diversity. • Future research aims to explore other distance metrics and weighting mechanisms.

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Publication Details

Journal
Kuwait Journal of Science
Published
2024-09-19
DOI
https://doi.org/10.1016/j.kjs.2024.100324
Citations
8
Primary Topic
Financial Distress and Bankruptcy Prediction
Type
article
Field-Weighted Citation Impact
7.57
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article

A new approach to K-nearest neighbors distance metrics on sovereign country credit rating

Ali Hakan Büyüklü, Ali İhsan Çetin
8 citations
Kuwait Journal of Science
Financial Distress and Bankruptcy Prediction
7.57
article

A new approach to K-nearest neighbors distance metrics on sovereign country credit rating

Ali Hakan Büyüklü, Ali İhsan Çetin
article en
8 citations

Abstract

This study introduces feature importance K-nearest neighbors (FIKNN), an innovative adaptation of the K-nearest neighbors (KNN) algorithm tailored for classifying sovereign country credit ratings. The primary objective is to enhance KNN's predictive accuracy by integrating a feature importance mechanism derived from the random forest algorithm, which prioritizes significant features and reduces the impact of less relevant ones, refining the distance computation within KNN. Utilizing a comprehensive dataset of sovereign credit ratings, the performance of FIKNN was assessed against traditional KNN using various feature sets and bootstrap samples. The FIKNN model consistently outperformed the standard KNN by approximately 1% in classification accuracy, attributed to the weighted distance metric adjusting feature influence based on importance. Key findings indicate that FIKNN effectively manages datasets with varying feature relevance and demonstrates a positive correlation between feature diversity and model performance. Future research will explore other distance metrics and refine the feature importance weighting mechanism to broaden FIKNN's applicability in diverse predictive tasks. • The adapted version of the KNN algorithm, FIKNN, improves country credit ratings. • Feature importance weighting optimizes KNN's distance calculation. • FIKNN achieves 1% higher classification accuracy compared to traditional KNN. • The model performs exceptionally well with datasets of high feature diversity. • Future research aims to explore other distance metrics and weighting mechanisms.

Kuwait Journal of ScienceVol. 52(1)
Yıldız Technical University (TR), Ankara Yıldırım Beyazıt University (TR)
Decent work and economic growth
Openalex Percentile: Top 3%
Financial Distress and Bankruptcy Prediction
7.57
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