Abstract:

The Spanish economy experienced a boom from 2000 until 2007; since then, the Spanish economy is affected by a financial and economical crisis. Thus, the boom of the Spanish economy relied on the construction sector producing a bubble of the property sector. As it occurred in other Western economies, the property bubble was enlarged by speculative construction and dramatically rising prices (average annual increases about 15%), but also the increase of the maturity of the loans causing high levels of indebtedness of the Spanish construction industry (Bank of Spain) for the period of time 2000-2006. Doubtless to say the construction sector bubble was maximized by the significant increase in private debt from householders and developers/builders promoted by a “kindly fine” financial system. However, this escalation ended with the international financial crisis, bringing construction companies to a default situation since their liabilities exceed the values of their assets, firmly affecting the banking system. In this context, we propose a model to forecast the bankruptcy of the companies belonging to the construction sector in Spain. For this purpose we select a sample of Spanish companies of the construction sector, then we build a database composed by economic and financial information from the companies selected. Then, we apply multivariate analysis in order to construct models to predict the bankruptcy of the representative sample of companies. Thus, we compare our model to previous models developed by Altman’s (1968), Pawlak (1991), Medina (2008). Finally we show the conclusions of our research and we discuss our improvements related to previous studies.