Finanţe: Provocările viitorului (Nov 2022)
Measuring the Risk of Bankruptcy in the Romanian Economy. Developments and Perspectives
Abstract
The paper presents the dynamics of a series of indicators considered by the supervisory authorities in Romania to analyse the risk of bankruptcy, but also the financial risk for the Romanian economy, aiming to indicate a perspective on the future evolution of these risks, taking into account the economic context, the situation generated by the Covid-19 Pandemic, but also the inflationary environment of the last year. We considered it important to start with the indicator for financial health, an indicator calculated at an aggregate level for all companies in Romania from the non-financial area, but also divided into subcategories that can provide important information regarding the health of companies and the risk of becoming insolvent. Also, the liquidity area has a considerable weight in the results obtained by these companies in the financial health score, and these aspects represent, in turn, indicators that can provide information about the bankruptcy risk of companies within an economy. To analyze the financial health, we followed the evolution of a series of other indicators, such as return on equity (ROE), the degree of long-term debt and the degree of short-term debt, indicators that provide additional information regarding the risk of bankruptcy, the financial risks of the companies, meaning the financial health of companies. The analysis of the dynamics and structure of the stock of loans for which rates have been suspended represents, at present, an important way to assess the risk of bankruptcy among non-financial companies in Romania, offering a better perspective regarding the bankruptcy risk of companies and the area where this type of risk is more concentrated. The last part of the paper was dedicated to a specific problem of the local economy and companies in our country, that of commercial credit, but also the level of insolvencies. Given that the banking level of the Romanian economy is a low one, a good part of the companies relies on commercial credits, and the chain of dependence built over time is extremely important for the smooth functioning of the economy. Therefore, the bankruptcy risk at the aggregate level and the financial risks were also analyzed from the perspective of insolvencies and commercial credit, these being two aspects that weigh extremely heavily, especially in an economy like Romania's.
