IDEAS home Printed from https://ideas.repec.org/a/pts/journl/y2017i2p41-47.html
   My bibliography  Save this article

Logistic Regression As A Tool For Determination Of The Probability Of Default For Enterprises

Author

Listed:
  • Erika SPUCHLAKOVA

    () (University of Zilina, Faculty of Operation and Economics of Transport and Communications, Slovak Republic)

  • Maria KOVACOVA

    () (University of Zilina, Faculty of Operation and Economics of Transport and Communications, Slovak Republic)

Abstract

In a rapidly changing world it is necessary to adapt to new conditions. From a day to day approaches can vary. For the proper management of the company it is essential to know the financial situation. Assessment of the company financial health can be carried out by financial analysis which provides a number of methods how to evaluate the company financial health. Analysis indicators are often included in the company assessment, in obtaining bank loans and other financial resources to ensure the functioning of the company. As company focuses on the future and its planning, it is essential to forecast the future financial situation. According to the results of company´s financial health prediction, the company decides on the extension or limitation of its business. It depends mainly on the capabilities of company´s management how they will use information obtained from financial analysis in practice. The findings of logistic regression methods were published firstly in the 60s, as an alternative to the least squares method. The essence of logistic regression is to determine the relationship between being explained (dependent) variable and explanatory (independent) variables. The basic principle of this static method is based on the regression analysis, but unlike linear regression, it can predict the probability of a phenomenon that has occurred or not. The aim of this paper is to determine the probability of bankruptcy enterprises.

Suggested Citation

  • Erika SPUCHLAKOVA & Maria KOVACOVA, 2017. "Logistic Regression As A Tool For Determination Of The Probability Of Default For Enterprises," Scientific Bulletin - Economic Sciences, University of Pitesti, vol. 16(2), pages 41-47.
  • Handle: RePEc:pts:journl:y:2017:i:2:p:41-47
    as

    Download full text from publisher

    File URL: http://economic.upit.ro/repec/pdf/2017_2_5.pdf
    Download Restriction: no

    References listed on IDEAS

    as
    1. repec:bla:joares:v:18:y:1980:i:1:p:109-131 is not listed on IDEAS
    2. Bianco, Ana M. & Martínez, Elena, 2009. "Robust testing in the logistic regression model," Computational Statistics & Data Analysis, Elsevier, vol. 53(12), pages 4095-4105, October.
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    Enterprise; Logistic regression; Probability of default.;

    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G24 - Financial Economics - - Financial Institutions and Services - - - Investment Banking; Venture Capital; Brokerage
    • G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation

    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:pts:journl:y:2017:i:2:p:41-47. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Logica Banica). General contact details of provider: http://edirc.repec.org/data/fepitro.html .

    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 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.

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

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.