for 11 financially sound enterprises and nine that were teetering on the brink of financial crisis and shown that the model could reveal the early signs of financial distress with an accuracy surpassing 90% and for some tests an accuracy of 98%.
The implications of this research may well be far-reaching. In an era where economic turbulence threatens the stability of even the most robust business, Meng's PLS-BP model offers a grounded means to identify an imminent crisis and so put in place strategies that might avert it. Meng acknowledges that the model as it stands has some limitations. While the early detection methodology offers good levels of precision, it is essentially a static approach. To better navigate real-world financial ecosystems, she proposes the integration of the model with system dynamics theory.