IDEAS home Printed from https://ideas.repec.org/a/gam/jijfss/v13y2025i3p133-d1703225.html

AI-Based Bankruptcy Prediction for Agricultural Firms in Central and Eastern Europe

Author

Listed:
  • Dominika Gajdosikova

    (Department of Economics, Faculty of Operation and Economics of Transport and Communications, University of Zilina, Univerzitna 1, 01026 Zilina, Slovakia)

  • Jakub Michulek

    (Department of Economics, Faculty of Operation and Economics of Transport and Communications, University of Zilina, Univerzitna 1, 01026 Zilina, Slovakia)

  • Irina Tulyakova

    (Department of Economics & Economic Policy, Faculty of Economics, Saint Petersburg State University, University Embankment 7-9, 199034 St. Petersburg, Russia)

Abstract

The agriculture sector is increasingly challenged to maintain productivity and sustainability amidst environmental, marketplace, and geopolitical pressures. While precision agriculture enhances physical production, the financial resilience of agricultural firms has been understudied. In this study, machine learning (ML) methods, including logistic regression (LR), decision trees (DTs), and artificial neural networks (ANNs), are employed to predict the bankruptcy risk for Central and Eastern European (CEE) farming firms. All models consistently showed high performance, with AUC values exceeding 0.95. DTs had the highest overall accuracy (95.72%) and F1 score (0.9768), LR had the highest recall (0.9923), and ANNs had the highest discrimination power (AUC = 0.960). Visegrad, Balkan, Baltic, and Eastern Europe subregional models featured economic and structural heterogeneity, reflecting the need for local financial risk surveillance. The results support the development of AI-based early warning systems for agricultural finance, enabling smarter decision-making, regional adaptation, and enhanced sustainability in the sector.

Suggested Citation

  • Dominika Gajdosikova & Jakub Michulek & Irina Tulyakova, 2025. "AI-Based Bankruptcy Prediction for Agricultural Firms in Central and Eastern Europe," IJFS, MDPI, vol. 13(3), pages 1-35, July.
    • Handle: RePEc:gam:jijfss:v:13:y:2025:i:3:p:133-:d:1703225
    as

    Download full text from publisher

    File URL: https://www.mdpi.com/2227-7072/13/3/133/pdf
    Download Restriction: no
    File URL: https://www.mdpi.com/2227-7072/13/3/133/
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Denis Kušter & Bojana Vuković & Sunčica Milutinović & Kristina Peštović & Teodora Tica & Dejan Jakšić, 2023. "Early Insolvency Prediction as a Key for Sustainable Business Growth," Sustainability, MDPI, vol. 15(21), pages 1-24, October.
    2. Shekar Shetty & Mohamed Musa & Xavier Brédart, 2022. "Bankruptcy Prediction Using Machine Learning Techniques," JRFM, MDPI, vol. 15(1), pages 1-10, January.
    3. Keijo Kohv & Oliver Lukason, 2021. "What Best Predicts Corporate Bank Loan Defaults? An Analysis of Three Different Variable Domains," Risks, MDPI, vol. 9(2), pages 1-19, January.
    4. Dimitra Seretidou & Dimitrios Billios & Antonios Stavropoulos, 2025. "Integrative Analysis of Traditional and Cash Flow Financial Ratios: Insights from a Systematic Comparative Review," Risks, MDPI, vol. 13(4), pages 1-28, March.
    5. Sylvia Jenčová & Róbert Štefko & Petra Vašaničová, 2020. "Scoring Model of the Financial Health of the Electrical Engineering Industry’s Non-Financial Corporations," Energies, MDPI, vol. 13(17), pages 1-17, August.
    6. Daniel BRÎNDESCU-OLARIU & Ionuţ GOLEŢ, 2013. "Bankruptcy Prediction Ahead of Global Recession: Discriminant Analysis Applied on Romanian Companies in Timiş County," Timisoara Journal of Economics and Business, West University of Timisoara, Romania, Faculty of Economics and Business Administration, vol. 6(19), pages 70-94.
    7. Lucia Michalkova & Olga Ponisciakova, 2025. "Bankruptcy Prediction, Financial Distress and Corporate Life Cycle: Case Study of Central European Enterprises," Administrative Sciences, MDPI, vol. 15(2), pages 1-19, February.
    8. Rafael La Porta & Florencio Lopez‐De‐Silanes & Andrei Shleifer, 1999. "Corporate Ownership Around the World," Journal of Finance, American Finance Association, vol. 54(2), pages 471-517, April.
    9. Djankov, Simeon & La Porta, Rafael & Lopez-de-Silanes, Florencio & Shleifer, Andrei, 2008. "The law and economics of self-dealing," Journal of Financial Economics, Elsevier, vol. 88(3), pages 430-465, June.
    10. Ilyes Abid & Rim Ayadi & Khaled Guesmi & Farid Mkaouar, 2022. "A new approach to deal with variable selection in neural networks: an application to bankruptcy prediction," Annals of Operations Research, Springer, vol. 313(2), pages 605-623, June.
    11. Kadri Männasoo & Peeter Maripuu & Aaro Hazak, 2018. "Investments, Credit, and Corporate Financial Distress: Evidence from Central and Eastern Europe," Emerging Markets Finance and Trade, Taylor & Francis Journals, vol. 54(3), pages 677-689, February.
    12. Madalina Ecaterina Popescu & Victor Dragotă, 2018. "What Do Post-Communist Countries Have in Common When Predicting Financial Distress?," Prague Economic Papers, Prague University of Economics and Business, vol. 2018(6), pages 637-653.
    13. Issa Hamadou & Aimatul Yumna & Hawaou Hamadou & Mamadou Salieu Jallow, 2024. "Unleashing the power of artificial intelligence in Islamic banking: A case study of Bank Syariah Indonesia (BSI)," Modern Finance, Modern Finance Institute, vol. 2(1), pages 131-144.
    14. Philip Arestis & Malcolm Sawyer, 2004. "On the Effectiveness of Monetary Policy and of Fiscal Policy," Review of Social Economy, Taylor & Francis Journals, vol. 62(4), pages 441-463.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Jun Chen & Wang Dong & Jamie Tong & Feida Zhang, 2018. "Corporate Philanthropy and Tunneling: Evidence from China," Journal of Business Ethics, Springer, vol. 150(1), pages 135-157, June.
    2. Deakin, Simon & Sarkar, Prabirjit & Singh, Ajit, 2010. "An End to Consensus? The (Non) Impact of Legal Reforms on Financial Development," MPRA Paper 53352, University Library of Munich, Germany.
    3. Hüttenbrink, Alexander & Oehmichen, Jana & Rapp, Marc Steffen & Wolff, Michael, 2014. "Pay-for-performance – Does one size fit all? A multi-country study of Europe and the United States," International Business Review, Elsevier, vol. 23(6), pages 1179-1192.
    4. Darko Tipuric & Veljko Trivun & Mia Mrgud & Maja Sukleva, 2013. "Protection Of Minority Shareholders In Bosnia-Herzegovina, Croatia, Macedonia, Montenegro And Serbia," Montenegrin Journal of Economics, Economic Laboratory for Transition Research (ELIT), vol. 9(2), pages 55-70.
    5. Hu, Gang & Liu, Yiye & Wang, Jacqueline Wenjie & Zhou, Gaoguang & Zhu, Xindong, 2022. "Insider ownership and stock price crash risk around the globe," Pacific-Basin Finance Journal, Elsevier, vol. 72(C).
    6. 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.
    7. Ayyagari, Meghana & Doidge, Craig, 2010. "Does cross-listing facilitate changes in corporate ownership and control?," Journal of Banking & Finance, Elsevier, vol. 34(1), pages 208-223, January.
    8. López-Iturriaga, Félix J. & Santana Martín, Domingo Javier, 2019. "The payout policy of politically connected firms: Tunnelling or reputation?," The North American Journal of Economics and Finance, Elsevier, vol. 50(C).
    9. Mauricio Jara‐Bertin & Félix J. López‐Iturriaga & Óscar López‐de‐Foronda, 2008. "The Contest to the Control in European Family Firms: How Other Shareholders Affect Firm Value," Corporate Governance: An International Review, Wiley Blackwell, vol. 16(3), pages 146-159, May.
    10. Matthias Köhler, 2012. "Ownership structure, regulation and the market for corporate control in the EU banking sector," European Journal of Law and Economics, Springer, vol. 34(1), pages 173-196, August.
    11. Estrin, Saul & Hanousek, Jan & Shamshur, Anastasiya, 2024. "Does it matter who owns firms? Evidence on the impact of supermajority control on private firms in Europe," International Review of Financial Analysis, Elsevier, vol. 95(PB).
    12. Boubakri, Narjess & Guedhami, Omrane & Saffar, Walid, 2016. "Geographic location, foreign ownership, and cost of equity capital: Evidence from privatization," Journal of Corporate Finance, Elsevier, vol. 38(C), pages 363-381.
    13. Chan, Konan & Chen, Hung-Kun & Hu, Shing-yang & Liu, Yu-Jane, 2018. "Share pledges and margin call pressure," Journal of Corporate Finance, Elsevier, vol. 52(C), pages 96-117.
    14. Dodig Ante & Dzidic Ante, 2022. "Dividend Policies in Volatile Transitioning Markets," Zagreb International Review of Economics and Business, Sciendo, vol. 25(1), pages 111-132.
    15. Shailer, Greg & Wang, Kun, 2015. "Government ownership and the cost of debt for Chinese listed corporations," Emerging Markets Review, Elsevier, vol. 22(C), pages 1-17.
    16. Omrane Guedhami & Jeffrey A. Pittman & Walid Saffar, 2014. "Auditor Choice in Politically Connected Firms," Journal of Accounting Research, John Wiley & Sons, Ltd., vol. 52(1), pages 107-162, March.
    17. Mohamed Khalil & Aydin Ozkan, 2016. "Board Independence, Audit Quality and Earnings Management: Evidence from Egypt," Journal of Emerging Market Finance, Institute for Financial Management and Research, vol. 15(1), pages 84-118, April.
    18. Pursey Heugens & Marc Essen & J. Oosterhout, 2009. "Meta-analyzing ownership concentration and firm performance in Asia: Towards a more fine-grained understanding," Asia Pacific Journal of Management, Springer, vol. 26(3), pages 481-512, September.
    19. Doidge, Craig & Andrew Karolyi, G. & Stulz, Ren M., 2009. "Has New York become less competitive than London in global markets? Evaluating foreign listing choices over time," Journal of Financial Economics, Elsevier, vol. 91(3), pages 253-277, March.
    20. Frijns, Bart & Gilbert, Aaron & Lehnert, Thorsten & Tourani-Rad, Alireza, 2013. "Uncertainty avoidance, risk tolerance and corporate takeover decisions," Journal of Banking & Finance, Elsevier, vol. 37(7), pages 2457-2471.

    More about this item

    Keywords

    ;
    ;
    ;
    ;

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:gam:jijfss:v:13:y:2025:i:3:p:133-:d:1703225. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: MDPI Indexing Manager (email available below). General contact details of provider: https://www.mdpi.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.