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INSOLVENCY PREDICTION AND CORPORATE BANKRUTPCY MODEL IN VISEGRAD GROUP COUNTRIES³
Lucia Michalkova, Maria Kovacova, Martin Cepel, Jaroslav Belas

ABSTRACT: The issue of insolvency prediction, or especially the corporate bankruptcy modelling has an irreplaceable role not only for the management of the companies to provide the appropriate actions in order to maintain the prosperity and competitiveness of the company, but also for all the stakeholders to know the financial health of the company and future development. Therefore, the main goal of the paper is to provide an insolvency prediction model for Visegrad group countries. The model is created using the real data on more than 450,000 companies from V4 countries collected from the Amadeus database. The model was trained and validated using 37 selected financial variables from 2018 to predict the financial distress statement in 2019. For the construction of the model multiple discriminant analysis and logistic regression were applied. Moreover, the proposed models represent a new way for bankruptcy prediction in the Visegrad Group (V4) compared to previous prediction models. The proposed models serve as a one-year-ahead bankruptcy prediction model and can be used in the practice of the companies as the common tool for insolvency prediction and corporate bankruptcy modelling not only in V4 countries, but also in other European countries.

KEYWORDS:  insolvency, corporate bankruptcy, prediction model, Visegrad Group countries / V4 countries.

JEL classification:  G33, C53.

³Acknowledgments:  The paper is an output of the project NFP313010BWN6 The implementation framework and business model of the Internet of Things, Industry 4.0 and smart transport and the science project VEGA 1/0677/22 Quo Vadis, Bankruptcy Models? Prospective Longitudinal Cohort Study with Emphasis on Changes Determined by COVID 19.