Macroeconomic factors' impact on the number of bankruptcies among small and medium-sized companies

Abstract: Small and medium-sized companies constitute a large part of the Swedish economy and are to a great extent exposed to the developments in the macroeconomy. There is a general consensus that it exists a relationship between these two components, but to what dimension is it true? The aim of this thesis is to evaluate if the number of bankruptcies among small and medium-sized companies can be explained by the situation in the macroeconomy. In order to do so, data have been collected and a multiple linear regression analysis has been accomplished. The result of the analysis suggests that a model of the six macroeconomic factors months, CPI, retail sales, OMX30, total enterprises and liquidated enterprises, can explain the number of bankruptcies to an extent of 64.49%. When comparing the adequacy of other models used to estimate risks of bankruptcy, it is stated that other models are more accurate. Furthermore, we have concluded that the model is useful to bring insight but only when considered in combinations with other models and tools.