Association of Financial Distress and Predicted Bankruptcy: The Case of Pakistani Banking Sector

• 발행기관: 한국유통과학회
• 저자명: Hafeez ULLAH Zhuquan WANG Muhammad Ghazanfar ABBAS Fan ZHANG Umeair SHAHZAD Memon Rafait MAHMOOD
• 간행물 정보: 『The Journal of Asian Finance, Economics and Business(JAFEB)』Vol. 8 No.1, 573~585쪽, 전체 13쪽
• 주제분류: 경제경영 > 경제학
• 파일형태: PDF
• 발행일자: 2021.01.30

영문 초록

The banking sector is one of the most important sectors in Pakistan’s struggling economy. Recent studies have recommended that suitable methods can be applied to predict bankruptcy. In this context, this work analyzes Pakistan’s banking sector’s financial status through the five-factor Altman Z-score model, which determines the probability of bankruptcy for an organization. Banking data has been collected through the Pakistan Stock Exchange (PSX) in the period 2013-2017. The Z-score assessment criteria is defined as: Z> 2.99 - “safe” zone; Z> 1.8 Z>2.98- “grey” zone; and Z <1.8 - “distress” zone. Results show good predictions for the local banking industry, while most foreign Pakistani banks were found bankrupt with the Z-score below 1.1. One of the financial risks investors face when investing in any company is the risk of bankruptcy. One of the most used models for predicting financial distress for any company is Altman’s Z-score model. On the other hand, the Z-score analysis suggests that all banking establishments are not bankrupt because they have sufficient ability to control bankruptcy. At the same time, foreign banks failed financially and would not be able to be sustained in the future because they do not have the ability to pay the short-term and long-term debt.

목차

1. Introduction

2. Literature Review

3. Research Methodology

4. Discussion

5. Conclusion and Policy Implications

References

키워드

Altman Z – Score Application Five-Factors Analysis Financial Distress Bankruptcy Banking Industry