Anna Siekelova

Faculty of Operation and Economics of Transport and Communications, University of Zilina

Slovakia

anna.siekelova@fpedas.uniza.sk

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

Maria Kovacova

Faculty of Operation and Economics of Transport and Communications, University of Zilina

Slovakia

maria.kovacova@fpedas.uniza.sk

George Lazaroiu

Spiru Haret University, Bucharest 

Romania

phd_lazaroiu@yahoo.com

Katarina Valaskova

Faculty of Operation and Economics of Transport and Communications, University of Zilina

Slovakia

katarina.valaskova@fpedas.uniza.sk 

Abstract. 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.

Received: September, 2018

1st Revision: February, 2019

Accepted: April, 2019

DOI: 10.14254/2071-8330.2019/12-2/17

JEL Classification: G00, C10

Keywords: Markov chain, stochastic processes, cohort method, probability theory, payment discipline, Visegrad group