Modeling the Financial Distress of Microenterprise Start- Ups Using Support Vector Machines: A Case Study

Despite the leading role that micro-entrepreneurship plays in economic development, and the high failure rate of microenterprise start-ups in their early years, very few studies have designed financial distress models to detect the financial problems of micro-entrepreneurs. Moreover, due to a lack of research, nothing is known about whether non-financial information and non-parametric statistical techniques improve the predictive capacity of these models. Therefore, this paper provides an innovative financial distress model specifically designed for microenterprise startups via support vector machines (SVMs) that employs financial, non-financial, and macroeconomic variables. Based on a sample of almost 5,500 micro-entrepreneurs from a Peruvian Microfinance Institution (MFI), our findings show that the introduction of non-financial information related to the zone in which the entrepreneurs live and situate their business, the duration of the MFI-entrepre-neur relationship, the number of loans granted by the MFI in the last year, the loan destination, and the opinion of experts on the probability that microenterprise start-ups may experience financial problems, significantly increases the accuracy performance of our financial distress model. Furthermore, the results reveal that the models that use SVMs outperform those which employ traditional logistic regression (LR) analysis.

• Autores: Blanco-Oliver, Antonio; Pino-Mejías, Rafael; Lara-Rubio, Juan
• Tipo de recurso: Article of journal
• Fecha de publicación: 2014
• Institución: Universidad Nacional de Colombia
• Repositorio: Universidad Nacional de Colombia
• Idioma: spa
• OAI Identifier: oai:repositorio.unal.edu.co:unal/65939
• Acceso en línea: https://repositorio.unal.edu.co/handle/unal/65939; http://bdigital.unal.edu.co/66962/
• Palabra clave: 3 Ciencias sociales / Social sciences; Financial distress model; microenterprise start-ups; microfinancial institutions; Latin American; non-financial variables; modelo de dificultades financieras; microempresas de nueva creación; instituciones microfinancieras; América Latina; variables no financieras; Modelo de dificuldades financeiras; microempresas de criação recente; micro-instituições financeiras; América Latina; variáveis não financeiras
• Rights: openAccess
• License: Atribución-NoComercial 4.0 Internacional