Abstract:

Since 2008, global crisis promoted individual businesses and multi-national corporations to file for bankruptcy, creating crucial social implications. Despite the fact that with the intrusion of governments and financial institutions to encourage the economy that has put corporations in billions of dollar of debt, reduces the prime rate to almost zero, increases unemployment rate and a decrease in the income rates. A countless opportunity was available to understand the facts of this economic fallout. It had become essential to predict the bankruptcy more seriously to minimize the economic crisis for corporate sector. The objective of the study was to examine the performance of Altman’s Z-score and Distance to Default model by data analysis to predict the chances of bankruptcy of Turkish stock listed companies between the years 2007 to the year 2016. This study also provides an overview on the subject of bankruptcies and their harmonic effects on the global economy. The result shows the projection that Z-score model clearly outperform in predicting the bankruptcy than Distance to Default model. Additionally, this research provides a better risk management to creditors, small businesses to improve their current operations to minimize failures and invest in healthy organizations and to short unhealthy ones. Keywords: Altman Model, Distance to Default Model, Bankruptcy Prediction, Credit Risk, Financial Ratios.

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