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Business Failure Prediction For Romanian Smes Using Multivariate Discriminant Analysis

Listed author(s):
  • MOSCALU Maricica

Business failure prediction is one of special importance for small and medium sized enterprises (SMEs) due to their increased vulnerability. Consequently, the purpose of this paper is to investigate the utility of financial ratios and other non-financial variables to predict business failure using a sample of Romanian SMEs and applying multiple discriminant analysis. The process that leads to failure is analyzed on a three year time horizon prior to failure and the results showed that failure can be accurately predicted with at least three years in advance. The overall accuracy of classification exceeded 77% in all years and increased as failure approached.

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File URL: http://economice.ulbsibiu.ro/revista.economica/archive/suplimente/Volume4-2012.pdf
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Article provided by Lucian Blaga University of Sibiu, Faculty of Economic Sciences in its journal Revista economica.

Volume (Year): Supplement (2012)
Issue (Month): 4 ()
Pages: 457-466

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Handle: RePEc:blg:reveco:v:supplement:y:2012:i:4:p:457-466
Contact details of provider: Postal:
Lucian Blaga University of Sibiu, Faculty of Economic Sciences Dumbravii Avenue, No.17, postal code 550324, Sibiu, Romania

Phone: 004 0269 210375
Fax: 004 0269 210375
Web page: http://economice.ulbsibiu.ro/
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  1. Aschauer, David Alan, 1989. "Is public expenditure productive?," Journal of Monetary Economics, Elsevier, vol. 23(2), pages 177-200, March.
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  8. Barro, Robert J, 1990. "Government Spending in a Simple Model of Endogenous Growth," Journal of Political Economy, University of Chicago Press, vol. 98(5), pages 103-126, October.
  9. Niloy Bose & M. Emranul Haque & Denise R. Osborn, 2007. "Public Expenditure And Economic Growth: A Disaggregated Analysis For Developing Countries," Manchester School, University of Manchester, vol. 75(5), pages 533-556, September.
  10. Oliviero A. Carboni & Giuseppe Medda, 2011. "Size And Composition Of Public Spending In A Neoclassical Growth Model," Metroeconomica, Wiley Blackwell, vol. 62(1), pages 150-170, February.
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