Risk of business failure in the C23 manufacturing sector in Ecuador
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Abstract
The analysis of business failure is important, considering that companies are the engine of a country's economy. In the present research work, the risk of failure of companies in the manufacturing sector of other non-metallic mineral products in Ecuador (ISIC C23) is studied. The data consists of an average of 183 companies in the period 2009-2019. Starting from the Ohlson model (1980), logit and probit econometric models are proposed to calculate the probability of failure of companies in the sector. In the logit model, the probability of failure is between 3,67% and 8,42%, while in the probit, it is between 3,79% and 7,75%. It is highlighted that as the business size increases, the risk of failure is reduced and that the year 2017 presents less risk. In addition, the logit model has greater predictive capacity.
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