Analysis of business failures in France

In the present economic situation, business failures are a matter of major concern to government and business alike. The current period of slow growth in France, and the rigidity of its productive system make it more important than ever to act to insure the survival of its industrial fabric. This necessity has found recognition in the fact that the French Parliament is now discussing a Government bill designed to head off business failures by means of a series of early-warning signals. Under this bill, the company auditors' obligation is widened to include the duty to report to the company any factor liable to compromise the continued operation of that firm. The context within which the Banque de France's ‘Centrale de Bilans’¹ is currently pursuing its work favors the development of a discriminant function capable of detecting symptoms of business failure at the earliest possible opportunity. This work has been facilitated, and usefully guided, by Altman's pioneering research in this field since 1968, as well as by the work of Blum, Deakin, Edmister and Taffler, to rite just a few names from the Anglo-Saxon world. In France, the most recent research has been initiated by the CESA Altman et al. (1974)] and pursued by Collongues, Sulzer, Conan and Holder, as well as by certain banks. But in this last case applications have remained strictly limited.