Small and medium enterprises (SME) are crucial for economy and have a higher exposure rate to default than large corporates. In this work, we address the problem of predicting the default of an SME. Default prediction models typically only consider the previous financial situation of each analysed company. Thus, they do not take into account the interactions between companies, which could be insightful as SMEs live in a supply chain ecosystem in which they constantly do business with each other. Thereby, we present a novel method to improve traditional default prediction models by incorporating information about the insolvency situation of customers and suppliers of a given SME, using a graph-based representation of SME supply chains. We analyze its performance and illustrate how this proposed solution outperforms the traditional default prediction approaches.
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