Prediction of Bankruptcy in a Different Period of Economic Development
Prediction of Bankruptcy in a Different Period of Economic Development

Author(s): Martina Sponerová, Miroslav Svoboda, Miroslav Sponer
Subject(s): Economy, National Economy, Financial Markets
Published by: Masarykova univerzita nakladatelství
Keywords: credit risk; bankruptcy prediction; SME; financial indicator
Summary/Abstract: The ability to predict bankruptcy is the factor, which eliminates the credit risk of a bank, so the prediction of bankruptcy and credit risk of a bank is a permanent subject matter of many scientific types of research. This paper focuses on the Czech economy, specifically at small and medium-sized enterprises (SMEs). We have chosen the SMEs sector because it plays a significant role in this economy. The aim of this article is finding if there exist different factors that could predict bankruptcy in the time at the end of the financial crisis and at the time of upturn. Our motivation is to show the most important factors which have to be taken into attention in different stages of economic development. We have investigated around 2 800 companies from the segment small and medium-sized enterprises (SMEs), of which 642 failed during the period 2010 – 2017. We have investigated financial data for the years from 2010 to 2017. The whole dataset was divided into two parts, to the period of the financial crisis and to the period of the upturn. The analyses were done separately for each period and for the whole period to capture different characteristics of companies in a different time. Our suggestion is that it is necessary to evaluate the financial information of the company according to the period of economic development.

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