Business Demography in Poland: Microeconomic and Macroeconomic Determinants of Firm Survival

The paper presents a model assigning a bankruptcy probability to a company, developed on the basis of individual data from balance sheets and income statements of Polish companies, collected by Central Statistical Office of Poland in the 2001 – 2010 period. Determinants for warning signals for bankruptcies were examined together with the possibilities of early identification of such signals. The research was based on a logistic regression performed on categorized variables transformed using a weight of evidence approach. Scoring methods were used to create an indicator for grading the companies in the case of bankruptcies. In the forecasting model of a possible bankruptcy in a year's horizon the highest weight was assigned to the indicator for the ability to cover financial costs which explained the company's ability to meet the interest payments and capital costs. Indebtedness, share of cash reserves in assets and sales’ revenues were considered in forecasting bankruptcies information regarding liquidity. Taking into account the direction of sales, the specialized exporters were least probable to go bankrupt. In the more generalized model which accounts for the macroeconomic situation the most important was the indicator for the ability to pay off debt. In the model forecasting bankruptcies three-years in advance - the early warning model - no dominant indicator was found. Weights of 20% were assigned to the indicators of liquidity, current assets turnover and the return on sales.