Bankruptcy risk prediction for Small and Medium-sized Enterprises in Portugal

For the benefit of its clients, nBanks invests in an important source of knowledge and innovation: academic research. As part of its partnership with the University of Minho, we interviewed Roxana Sera, author of a master's thesis that defines a predictive model to help Portuguese companies at risk of bankruptcy.

nBanks - Tell us a little about yourself and your background.

Roxana Sera - I am Romanian, but I have lived in Brazil for many years. I have a degree in Literature, with a master's in Japanese language, but throughout my career, I realized the importance of the finance and accounting area and became interested in acquiring specialized knowledge in this field. I worked for a few years in credit analysis at a multinational company in São Paulo and was always interested in understanding the financial models used in the area more deeply.

nBanks - What motivated you to collaborate with nBanks?

R.S. - From the beginning, I was very interested in doing a project with a company for my master's final work, as I believe it will provide me with a valuable opportunity to get to know the work environment in Portugal. nBanks, besides being a company in the financial area, presented a project that very fortunately coincided with my area of specialization, which is credit analysis. Furthermore, I really liked nBanks' proposal of activities, an innovative business model that proposes a platform for interaction between clients and financial institutions with transparency, simplicity, and directness.

nBanks - What thesis will you develop and what methodology will you use?

R.S. - My thesis will be on bankruptcy risk prediction for small and medium-sized enterprises (SMEs) in Portugal. The methodology to be used will be multiple discriminant analysis, applying an adapted version of the Z-Score model, with control variables and coefficients that I will try to identify as most relevant for Portuguese SMEs.

nBanks - What applicability do you think your thesis will have in the future? What benefits do you identify for companies and their managers? R.S. - My intention is to develop an adaptation of the Z-Score model that can adequately capture and measure the financial risks of Portuguese SMEs. This model, if properly developed, could be used in the future as a kind of diagnosis of a company's financial situation, or as an alert for a possible situation of financial difficulty or bankruptcy. This would be useful for companies as a tool, available to their managers, that indicates the degree of the company's financial health. The use of a predictive model allows, for example, comparison with other companies in the area, early warning about a possible risk of company closure, can be used as an indicator to use when seeking financial instruments in the financial market, facilitating access to credit, among others.

nBanks - What final comment would you like to leave?

R.S. - I believe that nBanks' business model has a great future and I would be very happy to contribute to the success of this model that integrates information, transparency, freedom of choice, and practicality.

The conclusions of this and the remaining 3 master's theses developed within the scope of the partnership established with the School of Economics and Management of the University of Minho will result in the creation of another functionality for the nBanks platform, to add to the range of tools available to support and streamline corporate financial management.

Next week, we will interview another student to present her master's thesis in conjunction with nBanks.

‍