The Use of Discriminant Analysis to Assess the Risk of Bankruptcy of Enterprises in Crisis Conditions Using the Example of the Tourism Sector in Poland

Agnieszka Gawlik,Joanna Wieprow

doi:10.3390/risks9040078

Agnieszka Gawlik, Joanna Wieprow

Open Access

https://doi.org/10.3390/risks9040078

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Abstract

The aim of this article is to use multiple discriminant analysis (MDA) and logit models to assess the risk of bankruptcy of companies in the Polish tourism sector in the crisis conditions caused by the COVID-19 pandemic. A review of the literature is used to select models appropriate to analyze the risk of bankruptcy of tourism enterprises listed on the Warsaw Stock Exchange (WSE). The data are from half-year financial statements (the first half of 2019 and 2020, respectively). The obtained results are compared with the current values of the Altman EM-score model and selected financial ratios. An analysis allowed the estimation of the risk of bankruptcy of enterprises from the tourism sector in Poland as well as the assessment of the prognostic value of these models in the tourism sector and the risk of a collapse of this market in Poland. The article fills the research gap created by the negligible use of solvency analysis of the tourism sector and constitutes the basis for estimating the risk of collapse of the tourism sector in a crisis situation.

Highlights

The tourism sector is one of the industries most affected by the coronavirus pandemic.The sharp decline in global demand for tourism services is a factor; the COVID-19 pandemic reduced the turnover of the global tourism sector by more than 50% in the first half of 2020
The aim of this study is to assess the risk of bankruptcy of companies in the tourism sector in Poland in the crisis conditions caused by the COVID-19 pandemic using discriminant analysis
It should be noted that multiple discriminant analysis (MDA) models have some limitations (Altman and Narayanan 1997)

Summary

Introduction

The tourism sector is one of the industries most affected by the coronavirus pandemic.The sharp decline in global demand for tourism services is a factor; the COVID-19 pandemic reduced the turnover of the global tourism sector by more than 50% in the first half of 2020. An important consideration in the context of the second wave of the pandemic, lockdowns, and restrictions on the activities of tourism enterprises is the risk of bankruptcy of businesses in this sector and the risks for the tourism industry, the share of which in the GDP of Poland in 2019 exceeded 6.3%. The three-month lockdown in the first half of 2020, travel restrictions, prohibitions on the organization of large events, fairs, and conferences, and the total paralysis of tourism have left many companies struggling to maintain liquidity. Another economic lockdown in early January 2021 may cause many of them to collapse

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