The Efficiency of Bankruptcy Forecast Models in the Hungarian SME Sector

Abstract

The paper examines the efficiency of bankruptcy forecast models in the Hungarian SME sector. We also try to construct own models using discriminant-analysis, logistical regression's, and neu-ral network methods, based on a random sample, what we try to validate on a second sample. It has been proved that our own model can only be applied on the first sample with an outstand-ing result. It has also been proved that complicated statistical solutions themselves are not always applicable; there is a need for the expertise of an experienced economist. The research, of course, does not say that the bankruptcy-forecast methods used in literature have lost their trustworthiness completely. It just draws the attention to the fact that the eco-nomic circumstances of Hungarian SMEs can't be compared to that of big foreign companies. Therefore, the results of the indexes developed to the large enterprise sector cannot help accu-rate decision making in case of SMEs. Huge narrowing of the complexity of economic charac-teristics may lead to false results.