Predicting Financial Distress of Slovak Enterprises: Comparison of Selected Traditional and Learning Algorithms Methods

Elena Gregova, Katarina Valaskova, Peter Adamko, Milos Tumpach and Jaroslav Jaros
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Elena Gregova: Faculty of Operation and Economics of Transport and Communications, University of Zilina, Univerzitna 1, 010 26 Zilina, Slovakia
Peter Adamko: Faculty of Operation and Economics of Transport and Communications, University of Zilina, Univerzitna 1, 010 26 Zilina, Slovakia
Milos Tumpach: Faculty of Economic Informatics, University of Economics in Bratislava, Dolnozemska cesta 1, 852 35 Bratislava, Slovakia
Jaroslav Jaros: University Science Park, Center for Technology Transfer, University of Zilina, Univerzitna 1, 010 26 Zilina, Slovakia

Sustainability, 2020, vol. 12, issue 10, 1-17

Abstract: Predicting the risk of financial distress of enterprises is an inseparable part of financial-economic analysis, helping investors and creditors reveal the performance stability of any enterprise. The acceptance of national conditions, proper use of financial predictors and statistical methods enable achieving relevant results and predicting the future development of enterprises as accurately as possible. The aim of the paper is to compare models developed by using three different methods (logistic regression, random forest and neural network models) in order to identify a model with the highest predictive accuracy of financial distress when it comes to industrial enterprises operating in the specific Slovak environment. The results indicate that all models demonstrated high discrimination accuracy and similar performance; neural network models yielded better results measured by all performance characteristics. The outputs of the comparison may contribute to the development of a reputable prediction model for industrial enterprises, which has not been developed yet in the country, which is one of the world’s largest car producers.

Keywords: default; enterprise in crisis; bankruptcy; financial distress; prediction models (search for similar items in EconPapers)
JEL-codes: O13 Q Q0 Q2 Q3 Q5 Q56 (search for similar items in EconPapers)
Date: 2020
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (11)

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Persistent link: https://EconPapers.repec.org/RePEc:gam:jsusta:v:12:y:2020:i:10:p:3954-:d:357046

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