The waves of enterprises bankruptcy and the factors that determine them: the case of Latvia and Lithuania

Bankruptcy of enterprises is macroeconomic issue and a phenomenon of a dynamic and competitive market economy. It results in a lot of negative effects not only for the enterprise and its employees but also for other enterprises and institutions, as well as the state and society. The aim of the article is to carry out the analysis of bankruptcy of Latvian and Lithuanian enterprises. No such study has been carried out so far. Article analyses the dynamics of Latvian and Lithuanian enterprise bankruptcy, which manifest themselves in larger waves in certain periods and the factors that influence them. From 1993 – when the bankruptcy of enterprises was started to be officially registered – to 1 January 2017, 21,503 Latvian enterprises and 20,933 Lithuanian enterprises went bankrupt. The largest wave of bankruptcy took place in the period of 2008-2010, when the financial crisis started in both countries. The comparative analysis of Latvian and Lithuanian enterprise bankruptcies was carried out according to the economic activity types and enterprises legal forms. In both countries mostly wholesale and retail trade, repair of motor vehicles and motorcycles enterprises (30% on average) go bankrupt, while construction enterprises (13% on average) are the runners-up. Initiators of enterprise bankruptcy are studied, numbers of Latvian and Lithuanian enterprises that went bankrupt are compared to the overall number of companies in the country. The data of this analysis are valuable when forecasting enterprise bankruptcy and preparing the measures to avoid it. The main research methods: analysis of scientific literature and statistical data, case analysis, methods of collection, grouping, comparison and generalization of information.