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The Comparison of Artificial Neural Networks and Panel Data Analysis on Profitability Prediction: The Case of Real Estate Investment Trusts

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  • Ayşegül PEKER
  • Duygu TUNALI

Abstract

In recent years, machine learning techniques have come to the forefront for profitability forecasting due to their flexibility in computation, ability to work with large and diverse data types, and capability to predict real-time changes. In addition, predicting profitability in practice is challenging and requires expertise. The primary aim of this study is to determine the most suitable profitability prediction model using Artificial Neural Network (ANN) algorithms, one of the machine learning techniques. Furthermore, the ANN prediction model was applied to the data set for the 2010-2019 quarters created from the financial statements of Real Estate Investment Trusts (REITs) companies traded in Borsa Istanbul (BIST) and the prediction success of the ANN technique was interpreted by comparing the findings obtained with the findings obtained as a result of panel data analysis. The comparison of these values with the findings of the panel data analysis has led to the conclusion that ANN prediction models can make more successful forecasts than panel data analysis models.

Suggested Citation

  • Ayşegül PEKER & Duygu TUNALI, 2025. "The Comparison of Artificial Neural Networks and Panel Data Analysis on Profitability Prediction: The Case of Real Estate Investment Trusts," Journal of Research in Economics, Politics & Finance, Ersan ERSOY, vol. 10(1), pages 160-183.
    • Handle: RePEc:ahs:journl:v:10:y:2025:i:1:p:160-183
    DOI: https://doi.org/10.30784/epfad.1602204
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    References listed on IDEAS

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    3. Olson, Dennis & Mossman, Charles, 2003. "Neural network forecasts of Canadian stock returns using accounting ratios," International Journal of Forecasting, Elsevier, vol. 19(3), pages 453-465.
    4. Darko B. Vukovic & Lubov Spitsina & Ekaterina Gribanova & Vladislav Spitsin & Ivan Lyzin, 2023. "Predicting the Performance of Retail Market Firms: Regression and Machine Learning Methods," Mathematics, MDPI, vol. 11(8), pages 1-23, April.
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    More about this item

    Keywords

    Profitability Prediction; Artificial Neural Network; Panel Data;
    All these keywords.

    JEL classification:

    • G17 - Financial Economics - - General Financial Markets - - - Financial Forecasting and Simulation
    • C33 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Models with Panel Data; Spatio-temporal Models
    • C45 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: Special Topics - - - Neural Networks and Related Topics

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