Prediction of payment discipline using the Markov chain – case studies of Visegrad Four

Title: Prediction of payment discipline using the Markov chain – case studies of Visegrad Four
Issue: Vol. 12, No 2, 2019
Published date: 05-2019 (print) / 05-2019 (online)
Journal: Journal of International Studies
ISSN: 2071-8330, eISSN: 2306-3483
Authors: Anna Siekelova
Faculty of Operation and Economics of Transport and Communications, University of Zilina, Slovakia

Maria Kovacova
Faculty of Operation and Economics of Transport and Communications, University of Zilina, Slovakia

George Lazaroiu
Spiru Haret University, Bucharest, Romania

Katarina Valaskova
Faculty of Operation and Economics of Transport and Communications, University of Zilina, Slovakia
Keywords: Markov chain, stochastic processes, cohort method, probability theory, payment discipline, Visegrad group
DOI: 10.14254/2071-8330.2019/12-2/17
Language: English
Pages: 270-284 (15)
JEL classification: G00, C10
The research leading to these results has received funding from the project titled "Creation of new paradigms of financial management at the threshold of the 21st century in conditions of the Slovak Republic" in the frame of the program of Slovak Scientific Grant Agency VEGA under the grant agreement number VEGA 1/0428/17.

This article responds to the current issue of declining payment discipline in the riskiest sector of the Visegrad Four. The aim of this article is to predict the future state of payment discipline in the selected sector of the Visegrad Four countries using the Markov chain. The turbulent market development has tested the financial stability of many businesses and their customers. The receivables and payment discipline of enterprises is an almost chronic problem, and not only of Slovak economy. The willingness of businesses to provide trade credit is declining. This paper defines the fundamental nature of receivables management. Within the overall receivables management process, the emphasis is primarily on assessing the creditworthiness of potential customers, which should be the basis for decision-making and more specifically - denial of trade credit. The authors identify the significant factors determining the payment discipline of enterprises in a selected sector of Visegrad Four countries. Subsequently, using the Markov chain based on past values (20016, 2017) of the chosen factors they predict the development of payment discipline in this sector.


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