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Entrepreneurship insolvency risk management: a case of Latvia

Author

Listed:
  • Irina Genriha
  • Gaida Pettere
  • Irina Voronova

Abstract

Financial crisis and its consequences are visible in the capital adequacy of many commercial banks, which indicates that the approach banks took to assess credit risk was not sufficiently sophisticated. This article discusses practical methods of insolvency risk modelling for enterprises. In this paper, the authors analysed the accuracy of ten models developed by foreign authors to assess insolvency risk, which were validated on the database of Latvian companies. The authors have shown that models developed on historical data for foreign companies are less accurate than the model developed on the basis of financial indicators of Latvian companies. The authors developed a three-factor model that estimates probability of default of Latvian enterprises based on historical data for 1,272 enterprises using binary logistic regression analysis.

Suggested Citation

  • Irina Genriha & Gaida Pettere & Irina Voronova, 2011. "Entrepreneurship insolvency risk management: a case of Latvia," International Journal of Banking, Accounting and Finance, Inderscience Enterprises Ltd, vol. 3(1), pages 31-46.
    • Handle: RePEc:ids:injbaf:v:3:y:2011:i:1:p:31-46
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    Citations

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    Cited by:

    1. Błażej Prusak, 2018. "Review of Research into Enterprise Bankruptcy Prediction in Selected Central and Eastern European Countries," IJFS, MDPI, vol. 6(3), pages 1-28, June.
    2. Beata Gavurova & Sylvia Jencova & Radovan Bacik & Marta Miskufova & Stanislav Letkovsky, 2022. "Artificial intelligence in predicting the bankruptcy of non-financial corporations," Oeconomia Copernicana, Institute of Economic Research, vol. 13(4), pages 1215-1251, December.
    3. Jonas Mackevičius & Ruta Šneidere & Daiva Tamulevičienė, 2018. "The waves of enterprises bankruptcy and the factors that determine them: the case of Latvia and Lithuania," Entrepreneurship and Sustainability Issues, VsI Entrepreneurship and Sustainability Center, vol. 6(1), pages 100-114, September.
    4. Jonas Mackevičius & Ruta Šneidere & Daiva Tamulevičienė, 2018. "The waves of enterprises bankruptcy and the factors that determine them: the case of Latvia and Lithuania," Post-Print hal-02121037, HAL.

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