The bankruptcy determinants of Swedish SMEs

The failure rate of Small and medium enterprises (SMEs), is high in Sweden. Around 6000 SMEs go into bankruptcy every year. This paper attempts to identify the main determinants that are perceived to have contribution to the failure of Swedish SMEs. The research is in principle based on the analysis of panel data matched sample consisting of 1991 bankrupted and 1991 nonbankrupted Swedish SMEs. The statistical techniques of discriminant and logit models are used for analyzing the data. The results, which have a high accuracy rate, indicate a set of three factors solvency, quick ratio and return on assets that have significant impact on bankruptcy probability of sample firms in the preceding year of bankruptcy. Furthermore, the results of the multiple discriminant analysis (MDA) for one year before bankruptcy are consistent with the results of logit model.