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On The Determinants of Industrial Firm Failure in the Uk and Russia in the 1990's

Author

Listed:
  • J Hunter
  • N Isachencova

Abstract

Based on data for corporate insolvency in Russia for 1995-96, a model of failure risk is developed using the familiar logit estimator. The sample size is controlled using the bootstrap to provide alternative estimates of model statistics and by comparison with a similar random sample drawn for the UK over the recession years 1990-91. It has been common approach to apply empirical predictors for the UK and USA to Russian data, which would appear poor practice in the context of an economy in transition. The model for Russia indicates that profitability is the dominant predictor as compared with gearing and liquidity for the UK. In the context of softer budget constraints and the common use of barter in Russian payments, the results suggest that policy makers and practitioners should pay specific attention to the profit position of companies.

Suggested Citation

  • J Hunter & N Isachencova, 2001. "On The Determinants of Industrial Firm Failure in the Uk and Russia in the 1990's," Working Papers wp208, Centre for Business Research, University of Cambridge.
    • Handle: RePEc:cbr:cbrwps:wp208
    Note: PRO-1
    as

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    More about this item

    Keywords

    Company Failure Risk; Russian Transition; Small Sample; Logit; Bootstrap;
    All these keywords.

    JEL classification:

    • G33 - Financial Economics - - Corporate Finance and Governance - - - Bankruptcy; Liquidation

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