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Original Article | Volume 2 Issue 4 (ACR, 2025) | Pages 1120 - 1127
Enhancing Financial Crisis Prediction with AI: Leveraging Historical Data and Machine Learning for Systemic Risk Management
1
School of Computer Applications, IMS Unison University, Dehradun, Uttarakhand,India
Under a Creative Commons license
Open Access
Abstract

Financial crises present severe dangers to global economies due to difficulties in predicting the events because of non-linear interdependent structures in financial systems. Econometric models from today show limitations in their ability to identify both advanced market patterns and moving economic factors which often reveal themselves before crisis events. The analysis implements machine learning and artificial intelligence models to predict financial crisis occurrences following large financial data and historical market information processing and analysis. The MacroHistory database includes financial crisis data from 1870 to 2020 which combines with warning indicators from 14 theoretical fields for this research. Researchers test the warning signal identification abilities of Random Forest machine learning through this study. The noted crucial predictors emerged from selection methods among which excessive credit growth together with asset price bubbles and liquidity constraints and typical market volatility spikes appear. AI-based forecasting predictions receive evaluation for detection of performance progress through the assessment versus regular statistical approaches and real-time adaptability and robustness enhancement. The predictive models help decision makers in the financial sector maintain financial stability while enforcing systemic risk management through useful data predictions. These techniques need practical implementation but developers must first solve problems with biased data and interpretability and regulatory compliance. AI possesses sufficient capabilities to transform crisis prediction methods yet needs ethical focus and transparent risk management systems with complete risk control protocols for its financial application

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