INTEGRATED SYSTEM OF THE EUROPEAN UNION FOR ANALYZING THE FINANCIAL PERFORMANCE OF COMPANIES AND EARLY WARNING OF BANKRUPTCY RISK

Abstract

The bankruptcy of an enterprise is a devastating phenomenon that affects not only the company undergoing bankruptcy, but also affiliated companies, investors, creditors, and society at large, and it can trigger a domino effect on the economy of the country in which the bankrupt company operated. Following the COVID-19 crisis period, during which the number of corporate bankruptcies in the EU declined due to massive EU and governmental supportive measures to mitigate the effects of the crisis, the fact that bankruptcies can be a lagging phenomenon, and the emergence of new macroeconomic and geopolitical destabilizing factors, the EU is facing a significant increase in the number of bankruptcies across most economic sectors and in the majority of its member states in the post-COVID period. At the same time, the EU is working on enhancing transparency in corporate operations by adopting new digitization strategies and designing a new system providing unified public access to information on company operations, including financial statements, namely the ESAP system. This paper presents a general platform model that utilizes Big Data technologies and machine learning algorithms which expands the functionalities of the ESAP platform and additionally offers continuous analyses of the financial performance and risk of bankruptcy of specific companies, industries, economic branches and sectors, national economies of member states, and the EU as a whole.