Impact of the Czech Changing Economic Environment on Bankruptcy Models

This paper is focused on corporate bankruptcy prediction models and methods to determine whether the evaluated entity has a higher probability of bankruptcy. Consequences of corporate financial distress for other business partners can be devastating and end with an insolvency proposal. To avoid these consequences, corporations need tools to provide reliable answers. Since the 1960s plenty of models have been created but not all of them are accurate enough for the current market conditions of the Czech Republic. The Czech Republic has witnessed an increasing number of insolvency proposals since 2008. There are several reasons such as the new insolvency law, global economic crisis, entering the European Union, and completion of the economic transformation, etc. The changing economic environment necessitates of testing current methods and models because reliability can decrease over time as many studies have shown.