Can Credit Scoring Models Effectively Predict Small Enterprise Default? Statistical Evidence from Italian Firms

This paper applies mainstream statistical techniques (linear discriminant analysis and logistic regression) to a sample of over 6,000 Italian firms in the attempt to develop two distress prediction models, specifically constructed for SEs and taking into account diversity of size, geographical location and business sector. For both models, prediction accuracy increases progressively with larger firms, and is higher in the North and in manufacturing firms.