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In full generality this is a very difficult question. The closest you will get to a general framework is Vapnik-Chervonenkis theory. You can read about this in Chapter 7.9 of "The elements of statistical learning" by Hastie, Tibshirani and Friedman which can be downloaded from their website . But be warned that this is a theoretical approach. Often more ...


The following is a good way to judge the quality of fits for a model.


Friend, take a step back and think what you really want to measure. During normal times you should never care about liquidity risk or credit risk of banks, EVER, at least what concerns the text book definitions of liquidity and credit risk. During times of stress you want to throw all accounting gimmicks and monkey numbers aboard and focus on one single ...

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