Original scientific paper

COMPARING FINANCIAL DISTRESS PREDICTION MODELS BEFORE AND DURING RECESSION

Nataša Šarlija orcid.org/0000-0003-2600-9735 ; Faculty of Economics in Osijek, University of J.J. Strossmayer in Osijek, Osijek, Croatia
Marina Jeger ; Faculty of Economics in Osijek, University of J.J. Strossmayer in Osijek, Osijek, Croatia

Abstract

The purpose of this paper is to design three separate financial distress prediction models that will track the changes in a relative importance of financial ratios throughout three consecutive years. The models were
based on the financial data from 2000 privately-owned small and medium-sized enterprises in Croatia from 2006 to 2009, and developed by means of logistic regression. Macroeconomic conditions as well as market dynamic have been changed over the mentioned period. Financial ratios that were less important in one period become more important in the next period. Composition of model starting in 2006 has been changed in the next years. It tells us what financial ratios are more important during the time of economic downturn. Besides, it helps us to understand behavior of small and medium-sized enterprises in the period of prerecession and in the period of recession.

Keywords

financial distress prediction; SMEs; logistic regression; financial ratios

Hrčak ID:

96658

URI

https://hrcak.srce.hr/96658

Publication date:

28.2.2011.

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