Skip to main content

The effect of size on the failure probabilities of SMEs: An empirical study on the US market using discrete hazard model

El Kalak, Izidin, Hudson, Robert (2016) The effect of size on the failure probabilities of SMEs: An empirical study on the US market using discrete hazard model. International Review of Financial Analysis, 43 . pp. 135-145. ISSN 1057-5219. (doi:10.1016/j.irfa.2015.11.009)

PDF - Author's Accepted Manuscript

Creative Commons Licence
This work is licensed under a Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International License.
Download (369kB) Preview
[img]
Preview
PDF - Author's Accepted Manuscript
Restricted to Repository staff only
Contact us about this Publication Download (723kB)
[img]
Official URL
http://dx.doi.org/10.1016/j.irfa.2015.11.009

Abstract

This paper investigates the extent to which the size affects the SME probabilities of bankruptcy. Using a dataset of (11,117) US non-financial firms, of which (465) filed for insolvency under chapters 7/11 between 1980 and 2013. We forecast the bankruptcy probabilities by developing four discrete-time duration-dependent hazard models for SMEs, Micro, Small, and Medium firms. A comparison of the default prediction models for medium firms and SMEs suggests that an almost identical set of explanatory variables affect the default probabilities leading us to believe that treating each of these groups separately has no material impact on the decision making process. However, comparisons between the micro and small firms with the SMEs firms strongly suggest that these categories need to be considered separately when modelling their credit risk.

Item Type: Article
DOI/Identification number: 10.1016/j.irfa.2015.11.009
Uncontrolled keywords: SMEs, Bankruptcy, Size, Discrete-time duration-dependent hazard model
Subjects: H Social Sciences > HG Finance
Divisions: Faculties > Social Sciences > Kent Business School > Accounting and Finance
Depositing User: Izidin El Kalak
Date Deposited: 20 May 2016 13:24 UTC
Last Modified: 29 May 2019 17:24 UTC
Resource URI: https://kar.kent.ac.uk/id/eprint/55638 (The current URI for this page, for reference purposes)
El Kalak, Izidin: https://orcid.org/0000-0002-2992-4042
  • Depositors only (login required):

Downloads

Downloads per month over past year