Empirics of Korean Shipping Companies’ Default Predictions

Sunghwa Park, Hyunsok Kim, Janghan Kwon and Taeil Kim
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Sunghwa Park: Shipping Finance Research Division, Korea Maritime Institute, Busan 49111, Korea
Hyunsok Kim: College of Economics and International Trade, Pusan National University, Busan 46241, Korea
Janghan Kwon: Ocean Economy and Statistics Research Department, Korea Maritime Institute, Busan 49111, Korea
Taeil Kim: Shipping and Logistics Research Department, Korea Maritime Institute, Busan 49111, Korea

Risks, 2021, vol. 9, issue 9, 1-17

Abstract: In this paper, we use a logit model to predict the probability of default for Korean shipping companies. We explore numerous financial ratios to find predictors of a shipping firm’s failure and construct four default prediction models. The results suggest that a model with industry specific indicators outperforms other models in predictive ability. This finding indicates that utilizing information about unique financial characteristics of the shipping industry may enhance the performance of default prediction models. Given the importance of the shipping industry in the Korean economy, this study can benefit both policymakers and market participants.

Keywords: default prediction; shipping company; logit model; risk management; financial information (search for similar items in EconPapers)
JEL-codes: C G0 G1 G2 G3 K2 M2 M4 (search for similar items in EconPapers)
Date: 2021
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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