Article ID: | iaor201526525 |
Volume: | 34 |
Issue: | 4 |
Start Page Number: | 275 |
End Page Number: | 289 |
Publication Date: | Jul 2015 |
Journal: | Journal of Forecasting |
Authors: | Manzaneque Montserrat, GarcA-Prez-De-Lema Domingo, Antn Renart Marcos |
Keywords: | forecasting: applications, statistics: regression |
The aim of this study was to answer the question of how the economic cycle affects the stability and efficiency of business failure prediction models, using bootstrap replacement method for validation. We analyse 2228 Spanish small and medium‐sized enterprises for the period 2001–2009, and divide it into three different phases of the economic cycle (growth, crisis, recession). We find that the structure and the ability of business failure prediction models are different according to the economic cycle. These findings are relevant for the debate on the most suitable financial ratios when developing business failure prediction models and to pose their accuracy level in these prediction models.