An evaluation of predicting corporate bankruptcy model by using MDA and logistic regression methods: Evidence from the UK service industryTools Cai, Jing (2018) An evaluation of predicting corporate bankruptcy model by using MDA and logistic regression methods: Evidence from the UK service industry. [Dissertation (University of Nottingham only)]
AbstractWhile the world economy is slowly recovering, there are still many uncertainties in the economic environment. One such uncertainty is that the SMEs are facing more severe pressure and challenges; For SMEs it is important that any potential bankruptcy be recognized at the earliest opportunity. The Altman Z-score model is one of the most well-known default prediction models by using MDA method. However the performance of the Altman Z-score model is often found to be unsatisfactory due the changes in time and the original limitations of the model. This study uses United Kingdom's SMEs as a sample group and MDA and logistics modeling methodology. A bankruptcy prediction model is employed to find the best way to predict default risk in UK. It combines nine financial variables, covering a firm's financial information of operation, profitability and solvency. The empirical results show that the UK-based MDA model and logistics model has better predicting ability than the original Altman Z''-score model in the UK SMEs group. Additionally, the logistic regression model has the highest accuracy rate in this study.
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