Article2011

Predicting default of a small business using different definitions of financial distress

75 citations0/0 files storedJournal of the Operational Research Society

No readable copy stored yet — this record is metadata only.

No open-access location is known for this record yet.

Literature note Cite in a project Citation map

Financial Distress and Bankruptcy Prediction Corporate Insolvency and Governance Forecasting Techniques and Applications

Abstract

The paper introduces a number of risk-rating models for UK small businesses applying an accounting-based approach, which uses financial ratios to predict corporate bankruptcy. An enhancement to these models is considered through features typical to retail credit risk modelling. A common problem of default prediction consists in the relatively small number of bankruptcies or real defaults available for model-building. In order to expand the ‘default’ group beyond bankrupt companies, the paper considers adopting four different definitions of ‘a failing business’ by investigating combinations of financial distress levels. The impact of each default definition on the choice of predictor variables and on the model's predictive accuracy is explored. In addition, the paper examines the value of categorizing financial ratios used as predictor variables.

Paper brief

Loading…

Cite this work

Citation unavailable for this work.

BibTeX RIS CSL-JSON

No public copy is stored for this record, so only the metadata is cited.

Citations in this library

Citation map →

Stored only when both papers are in the corpus — 75 citations exist upstream.

References

1968FINANCIAL RATIOS, DISCRIMINANT ANALYSIS AND THE PREDICTION OF CORPORATE BANKRUPTCY 1974ON THE PRICING OF CORPORATE DEBT: THE RISK STRUCTURE OF INTEREST RATES*1980Financial Ratios and the Probabilistic Prediction of Bankruptcy 1995Pricing Derivatives on Financial Securities Subject to Credit Risk 2002Small Business Credit Availability and Relationship Lending: The Importance of Bank Organisational Structure 1997Statistical Classification Methods in Consumer Credit Scoring: A Review 2002Credit Scoring and Its Applications 2007Modelling Credit Risk for SMEs: Evidence from the U.S. Market

Cited by

2017Empirical comparison of hazard models in predicting SMEs failure 2015Bankruptcy prediction of small and medium enterprises using a flexible binary generalized extreme value model 2017Impact of market-based finance on SMEs failure 2021A credit scoring model for SMEs using AHP and TOPSIS 2018Does size matter in predicting SMEs failure?

Explore the map →

Papers that cite the same references — the relational fallback while embeddings are still backfilling.

Imported from OpenAlex (CC0) — nothing here is generated.