Financial ratios, corporate governance and bank-firm information: a Bayesian approach to predict SMEs’ default

The paper aims to jointly combine three diferent categories of variables (fnan cial ratios, corporate governance data and bank-frm information) to predict SMEs’ default. To this end, a merged longitudinal predictive model was applied to a sample of 973 Italian SMEs that are clients of 36 diferent co-operative banks. The col lected data (for a total of 23 variables included in the model) relate to the years 2012–2014. The main fndings reveal the high predictive power of leverage ratio, CEO tenure and ownership concentration, and the number of loans overdue for more than 180 days in the previous 12 months.