engleski

Modelling the Impact of Macroeconomic Variables on Aggregate Corporate Insolvency: Case of Croatia

Research dealing with corporate failure and insolvency in transition countries, mostly use a combination of financial ratios in investigating corporate failures, i.e. the microeconomic approach. By relying just on the microeconomic approach, it is not possible to completely capture the complexity of business operations. In recent years, there has been a growing interest in exploring the predictive power of macroeconomic variables in forecasting company insolvencies. As the macroeconomic approach so far has been applied only on developed economies, this paper investigates the influence of macroeconomic variables on aggregate corporate insolvency in Croatia, using vector error-correction model for the period 2000 - 2011. We find long-run dynamic connection between the corporate insolvency rate and the unemployment rate while corporate credits, long-term interest rates and industrial production have a short-term effect on the corporate insolvency rate.

corporate insolvency; macroeconomic variables; vector error-correction model

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