Bankruptcy Prediction: The Case of the Czech Republic and Slovakia
Bankruptcy Prediction: The Case of the Czech Republic and Slovakia

Author(s): Martina Sponerová
Subject(s): Social Sciences, Economy
Published by: Udruženje ekonomista i menadžera Balkana
Keywords: Bankruptcy prediction; Financial distress; SME; Financial indicator; Logistic regression
Summary/Abstract: A considerable number of publications accompanies the research topic of bankruptcy prediction. This has been motivated by the massive toll on SMEs caused by the global crisis of 2007-2009, the recent COVID-19 crisis and the resulting need to update indicators of SME failure. This paper focuses on the Czech and Slovak economies, specifically at small and medium-sized enterprises (SMEs). This article aims to find if different factors could predict bankruptcy for Czech and Slovak companies. There were investigated 574 Czech companies and 889 Slovak companies for the period 2010 – 2018. The resulting findings confirm conclusions of the last year’s literature review. It is most appropriate to construct a financial distress model for a given country or a group of countries with similar characteristics or neighbouring countries. Furthermore, it is advisable to exploit common used financial indicators with a combination of modified indicators to assess the probability of bankruptcy precisely.

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