IDEAS home Printed from https://ideas.repec.org/a/taf/jbemgt/v18y2017i6p1156-1173.html
   My bibliography  Save this article

Predictive potential and risks of selected bankruptcy prediction models in the Slovak business environment

Author

Listed:
  • Beata Gavurova
  • Miroslava Packova
  • Maria Misankova
  • Lubos Smrcka

Abstract

In our study, we focused on the assessment of four bankruptcy prediction models, to figure out which model is most appropriate in the conditions of the Slovak business environment. Based on the previous research within the Slovak conditions, we set a portfolio of 4 models to be assessed: Altman model (1984), Ohlson model (1980), indexes IN01 and IN05 that were validated on the sample of 700 Slovak companies. Based on previous studies we expected that IN indexes are superior to Ohlson and Altman model. The excellency of our research lies in validation and assessing the accuracy of bankruptcy prediction models at three levels: the overall accuracy, accuracy of the bankruptcy prediction, and the non-bankruptcy prediction accuracy. This analytical structure enables to look at the topic more complexly and to increase the objectification of accuracy of analysed models. Based on the results, we showed that Ohlson model is not applicable to predict bankruptcy in the Slovak conditions as reached the lowest bankruptcy prediction ability even if has high non bankruptcy prediction ability. On the other hand, we have confirmed our expectation about the bankruptcy prediction ability of index IN05, that is proven to be superior to Ohlson and Altman model and so is the most appropriate model for Slovak business environment.

Suggested Citation

  • Beata Gavurova & Miroslava Packova & Maria Misankova & Lubos Smrcka, 2017. "Predictive potential and risks of selected bankruptcy prediction models in the Slovak business environment," Journal of Business Economics and Management, Taylor & Francis Journals, vol. 18(6), pages 1156-1173, November.
    • Handle: RePEc:taf:jbemgt:v:18:y:2017:i:6:p:1156-1173
    DOI: 10.3846/16111699.2017.1400461
    as

    Download full text from publisher

    File URL: http://hdl.handle.net/10.3846/16111699.2017.1400461
    Download Restriction: Access to full text is restricted to subscribers.
    File URL: https://libkey.io/10.3846/16111699.2017.1400461?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. G. Lanine & R. Vander Vennet, 2005. "Failure prediction in the Russian bank sector with logit and trait recognition models," Working Papers of Faculty of Economics and Business Administration, Ghent University, Belgium 05/329, Ghent University, Faculty of Economics and Business Administration.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Jaromir VRBKA & Vojtech STEHEL, 2019. "The Issue Of Multicriteria Decision-Making: Model Example Of Business Partner Risk Assessment," Proceedings of the INTERNATIONAL MANAGEMENT CONFERENCE, Faculty of Management, Academy of Economic Studies, Bucharest, Romania, vol. 13(1), pages 738-749, November.
    2. Josep Patau & Antonio Somoza & Salvador Torra, 2020. "Diagnosis of the Domino Effect in Bankruptcy Situations Through Positioning Maps and Their Evolution 10 Years Later," SAGE Open, , vol. 10(4), pages 21582440209, December.
    3. Tomáš Krulický & Veronika Machová & Ondřej Dvorák, 2022. "Actual paid cost of equity in construction," Entrepreneurship and Sustainability Issues, VsI Entrepreneurship and Sustainability Center, vol. 10(1), pages 408-419, September.
    4. Aleksandr Kljuènikov & Mehmet Civelek & Cyril Klimeš & Radim Farana, 2022. "Export risk perceptions of SMEs in selected Visegrad countries," Equilibrium. Quarterly Journal of Economics and Economic Policy, Institute of Economic Research, vol. 17(1), pages 173-190, March.
    5. Md Jahidur Rahman & Hongtao Zhu, 2023. "Predicting accounting fraud using imbalanced ensemble learning classifiers – evidence from China," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 63(3), pages 3455-3486, September.
    6. Elena Gregova & Katarina Valaskova & Peter Adamko & Milos Tumpach & Jaroslav Jaros, 2020. "Predicting Financial Distress of Slovak Enterprises: Comparison of Selected Traditional and Learning Algorithms Methods," Sustainability, MDPI, vol. 12(10), pages 1-17, May.
    7. Marek Vochozka & Jaromir Vrbka & Petr Suler, 2020. "Bankruptcy or Success? The Effective Prediction of a Company’s Financial Development Using LSTM," Sustainability, MDPI, vol. 12(18), pages 1-17, September.
    8. Rafal Siedlecki & Pawel Predkiewicz & Agnieszka Bem & Aleksandra Szpulak, 2021. "Working Capital Management in Hospitals: Evidence from Poland," European Research Studies Journal, European Research Studies Journal, vol. 0(Special 1), pages 836-850.
    9. Monika Burghauserová & Zuzana Rowland & Lenka Novotná, 2022. "Production function in agriculture in the Czech Republic," Entrepreneurship and Sustainability Issues, VsI Entrepreneurship and Sustainability Center, vol. 10(1), pages 453-466, September.
    10. Andrzej Jaki & Wojciech Ćwięk, 2020. "Bankruptcy Prediction Models Based on Value Measures," JRFM, MDPI, vol. 14(1), pages 1-14, December.
    11. Zuzana Virglerova, 2018. "Differences In The Concept Of Risk Management In V4 Countries," International Journal of Entrepreneurial Knowledge, Center for International Scientific Research of VSO and VSPP, vol. 6(2), pages 100-109, December.
    12. Jarosław Kaczmarek & Konrad Kolegowicz & Wojciech Szymla, 2022. "Restructuring of the Coal Mining Industry and the Challenges of Energy Transition in Poland (1990–2020)," Energies, MDPI, vol. 15(10), pages 1-48, May.
    13. Katarina Valaskova & George Lazaroiu & Judit Olah & Anna Siekelova & Barbora Lancova, 2019. "How Capital Structure Affects Business Valuation: A Case Study of Slovakia," Central European Business Review, Prague University of Economics and Business, vol. 2019(3), pages 1-17.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. H. Ooghe & C. Spaenjers & P. Vandermoere, 2005. "Business failure prediction: simple-intuitive models versus statistical models," Working Papers of Faculty of Economics and Business Administration, Ghent University, Belgium 05/338, Ghent University, Faculty of Economics and Business Administration.
    2. M. Dossche & G. Everaert, 2005. "Measuring inflation persistence: a structural time series approach," Working Papers of Faculty of Economics and Business Administration, Ghent University, Belgium 05/340, Ghent University, Faculty of Economics and Business Administration.
    3. E. Labro & M. Vanhoucke, 2005. "A simulation analysis of interactions between errors in costing system design," Working Papers of Faculty of Economics and Business Administration, Ghent University, Belgium 05/333, Ghent University, Faculty of Economics and Business Administration.
    4. Sun, Junjie & Wu, Deming & Zhao, Xinlei, 2018. "Systematic risk factors and bank failures," Journal of Economics and Business, Elsevier, vol. 98(C), pages 1-18.
    5. J. Albrecht & M. Neyt & T. Verbeke, 2005. "Bureaucratisation and the growth of health care expenditures in Europe," Working Papers of Faculty of Economics and Business Administration, Ghent University, Belgium 05/335, Ghent University, Faculty of Economics and Business Administration.
    6. Guvenir, H. Altay & Cakir, Murat, 2009. "Voting Features based Classifier with Feature Construction and its Application to Predicting Financial Distress," MPRA Paper 21595, University Library of Munich, Germany.
    7. Jaizah Othman & Mehmet Asutay, 2018. "Integrated early warning prediction model for Islamic banks: the Malaysian case," Journal of Banking Regulation, Palgrave Macmillan, vol. 19(2), pages 118-130, April.
    8. P. Windels & J. Christiaens, 2005. "Management Reform in Flemish Local Authorities: Testing the Institutional Framework," Working Papers of Faculty of Economics and Business Administration, Ghent University, Belgium 05/331, Ghent University, Faculty of Economics and Business Administration.
    9. N. Geeroms & P. Van Kenhove & W. Verbeke, 2005. "Health Advertising to promote Fruit and Vegetable Intake: Application of need-related Health Audience Segmentation," Working Papers of Faculty of Economics and Business Administration, Ghent University, Belgium 05/336, Ghent University, Faculty of Economics and Business Administration.
    10. W. Bruggeman & P. Everaert & S. R. Anderson & Y. Levant, 2005. "Modeling Logistics Costs using Time-Driven ABC: A Case in a Distribution Company," Working Papers of Faculty of Economics and Business Administration, Ghent University, Belgium 05/332, Ghent University, Faculty of Economics and Business Administration.
    11. M. Vanhoucke & B. Maenhout, 2005. "Characterisation and Generation of Nurse Scheduling Problem Instances," Working Papers of Faculty of Economics and Business Administration, Ghent University, Belgium 05/339, Ghent University, Faculty of Economics and Business Administration.
    12. Jan Lepoutre & Nikolay Dentchev & Aimé Heene, 2007. "Dealing With Uncertainties When Governing CSR Policies," Journal of Business Ethics, Springer, vol. 73(4), pages 391-408, July.
    13. B. Maenhout & M. Vanhoucke, 2005. "New Computational Results for the Nurse Scheduling Problem: A Scatter Search Algorithm," Working Papers of Faculty of Economics and Business Administration, Ghent University, Belgium 05/341, Ghent University, Faculty of Economics and Business Administration.
    14. Salvador Marín Hernández & Ester Gras Gil & Marcos Antón Renart, 2011. "Financial information and restructuring of spanish savings banks in a context of crisis. Changes in the regulation; content and evolution of FROB," CIRIEC-España, revista de economía pública, social y cooperativa, CIRIEC-España, issue 73, pages 99-126, October.
    15. Ekaterina Tzvetanova, 2019. "Adaptation of the Altman’s Corporate Insolvency Prediction Model – The Bulgarian Case," Economic Studies journal, Bulgarian Academy of Sciences - Economic Research Institute, issue 4, pages 125-142.
    16. L. Pozzi, 2005. "Income Uncertainty and Aggregate Consumption," Working Papers of Faculty of Economics and Business Administration, Ghent University, Belgium 05/334, Ghent University, Faculty of Economics and Business Administration.
    17. W. Buckinx & D. Van Den Poel, 2005. "Assessing and exploiting the profit function by modeling the net impact of targeted marketing," Working Papers of Faculty of Economics and Business Administration, Ghent University, Belgium 05/330, Ghent University, Faculty of Economics and Business Administration.
    18. Jarko Fidrmuc & Philipp J. Süss, 2011. "The Outbreak of the Russian Banking Crisis," Czech Economic Review, Charles University Prague, Faculty of Social Sciences, Institute of Economic Studies, vol. 5(1), pages 046-063, March.
    19. Karminsky, A. & Kostrov, A., 2013. "Modeling the Default Probabilities of Russian Banks: Extended Abillities," Journal of the New Economic Association, New Economic Association, vol. 17(1), pages 64-86.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:taf:jbemgt:v:18:y:2017:i:6:p:1156-1173. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Chris Longhurst (email available below). General contact details of provider: http://www.tandfonline.com/TBEM20 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.