This cooperation project with the Zentrum für Finanzen und Ökonometrie at the University of Konstanz examines the risk of providers of outside capital or of business partners when granting loans or concluding a transaction. Contrary to existing studies, we are not interested in assessing the probability of liquidity squeezes of certain company types, rather we intend to analyse the whole history of debtor/creditor relationships of a company. In contrast to existing studies, we will assess conditional default probabilities, i.e. conditional on the financial situation of a company in the previous period. We will analyse which observable, economic determinants cause a change in the financial situation (e.g. failure to use discounts, default, or order for arrest). The ZEW Foundation Panel for East Germany constitutes the basis for the empirical analyses. Past studies demonstrated that the bankruptcy probability possesses a strong cyclical element. In order to allow for such cyclical influences we will use information from the ZEW/Creditreform business survey conducted among business-related service providers, together with the data of the Foundation Panel for East Germany. In the context of this business survey, a business indicator for the economic sector of business-related service providers was developed and presented to the public in April 1998. The econometric analysis is based on mark off chain models which - unlike traditional mark off chains - allow explanatory variables. By applying a simulated maximum-likelihood approach we will also include unobservable company heterogeneity.