IDEAS home Printed from https://ideas.repec.org/a/eco/journ1/2017-03-43.html
   My bibliography  Save this article

Analysis Z-score to Predict Bankruptcy in Banks Listed in Indonesia Stock Exchange

Author

Listed:
  • Muammar Khaddafi

    (Department of Accounting, Faculty of Economics, Universitas Malikussaleh, Lhokseumawe, Indonesia,)

  • Falahuddin

    (Department of Accounting, Faculty of Economics, Universitas Malikussaleh, Lhokseumawe, Indonesia,)

  • Mohd. Heikal

    (Department of Management, Faculty of Economics, Universitas Malikussaleh, Lhokseumawe, Indonesia,)

  • Ayu Nandari

    (Department of Accounting, Faculty of Economics, Universitas Malikussaleh, Lhokseumawe, Indonesia.)

Abstract

This study aimed to test the predictions of bankruptcy in the banking companies listed in the Indonesia Stock Exchange using the Altman Z-score to see how big the bankruptcy prediction during period of 2011-2013 in the banking Industry. Calculating each bank's bankruptcy prediction on each 29 banks institution. The data used in this study is the annual financial statements that are Exchange Indonesia. The analysis technique used is a bankruptcy prediction model Altman Z-score. By using the formula Z-score = 1.2X1 + 1.4 X2 + 3.3X3 + 0.6 + 1.0 X4 X5. The criteria for assessing a Z-score > 2.99 categorized as a very healthy company. 1.81

Suggested Citation

  • Muammar Khaddafi & Falahuddin & Mohd. Heikal & Ayu Nandari, 2017. "Analysis Z-score to Predict Bankruptcy in Banks Listed in Indonesia Stock Exchange," International Journal of Economics and Financial Issues, Econjournals, vol. 7(3), pages 326-330.
    • Handle: RePEc:eco:journ1:2017-03-43
    as

    Download full text from publisher

    File URL: http://www.econjournals.com/index.php/ijefi/article/download/4163/pdf
    Download Restriction: no
    File URL: http://www.econjournals.com/index.php/ijefi/article/view/4163/pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Edward I. Altman, 1968. "Financial Ratios, Discriminant Analysis And The Prediction Of Corporate Bankruptcy," Journal of Finance, American Finance Association, vol. 23(4), pages 589-609, September.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Shailesh Rastogi & Arpita Sharma & Geetanjali Pinto & Venkata Mrudula Bhimavarapu, 2022. "A literature review of risk, regulation, and profitability of banks using a scientometric study," Future Business Journal, Springer, vol. 8(1), pages 1-17, December.
    2. Halldess Nguta Munene & James Ndegwa & Thomas Senaji & Kenneth M. Mugambi, 2020. "Influence of Board Characteristics on Financial Distress of Deposit Taking SACCOs in Nairobi County, Kenya," International Journal of Finance & Banking Studies, Center for the Strategic Studies in Business and Finance, vol. 9(4), pages 97-110, October.
    3. Ajaan Rahman Khan & Chinmoy Das Gupta & Md. Ali Ashraf, 2021. "Relationship Between Banking Performance and Financial Distress: A Study on Banks of Bangladesh," Issues in Economics and Business, Macrothink Institute, vol. 7(1), pages 15-25, June.
    4. Munene Halldess Nguta & Ken Mugambi, 2021. "Analysis of the Related Party Transactions interms of managerial and financial issues for the Kenyan Savings and Credit Cooperatives," International Journal of Finance & Banking Studies, Center for the Strategic Studies in Business and Finance, vol. 10(1), pages 48-61, January.
    5. Subrata Deb Nath & Prasenjit Kumer Biswas & Md. Aminur Rashid & Munna Rani Biswas, 2020. "Financial Distress Prediction through Altman Z-Score Model: A Case Study of State Owned Commercial Banks of Bangladesh," Indian Journal of Commerce and Management Studies, Educational Research Multimedia & Publications,India, vol. 11(3), pages 60-67, September.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Shaikh, Ibrahim A. & O'Brien, Jonathan Paul & Peters, Lois, 2018. "Inside directors and the underinvestment of financial slack towards R&D-intensity in high-technology firms," Journal of Business Research, Elsevier, vol. 82(C), pages 192-201.
    2. Mikel Bedayo & Gabriel Jiménez & José-Luis Peydró & Raquel Vegas, 2020. "Screening and Loan Origination Time: Lending Standards, Loan Defaults and Bank Failures," Working Papers 1215, Barcelona School of Economics.
    3. Ruey-Ching Hwang, 2013. "Forecasting credit ratings with the varying-coefficient model," Quantitative Finance, Taylor & Francis Journals, vol. 13(12), pages 1947-1965, December.
    4. Giordani, Paolo & Jacobson, Tor & Schedvin, Erik von & Villani, Mattias, 2014. "Taking the Twists into Account: Predicting Firm Bankruptcy Risk with Splines of Financial Ratios," Journal of Financial and Quantitative Analysis, Cambridge University Press, vol. 49(4), pages 1071-1099, August.
    5. Li, Chunyu & Lou, Chenxin & Luo, Dan & Xing, Kai, 2021. "Chinese corporate distress prediction using LASSO: The role of earnings management," International Review of Financial Analysis, Elsevier, vol. 76(C).
    6. Suzan Hol, 2006. "The influence of the business cycle on bankruptcy probability," Discussion Papers 466, Statistics Norway, Research Department.
    7. Pavol Durana & Lucia Michalkova & Andrej Privara & Josef Marousek & Milos Tumpach, 2021. "Does the life cycle affect earnings management and bankruptcy?," Oeconomia Copernicana, Institute of Economic Research, vol. 12(2), pages 425-461, June.
    8. Dinh, K. & Kleimeier, S., 2006. "Credit scoring for Vietnam's retail banking market : implementation and implications for transactional versus relationship lending," Research Memorandum 012, Maastricht University, Maastricht Research School of Economics of Technology and Organization (METEOR).
    9. Elizaveta Danilova & Evgeny Rumyantsev & Ivan Shevchuk, 2018. "Review of the Bank of Russia – IMF Workshop 'Recent Developments in Macroprudential Stress Testing'," Russian Journal of Money and Finance, Bank of Russia, vol. 77(4), pages 60-83, December.
    10. Alderson, Michael J. & Betker, Brian L. & Halford, Joseph T., 2021. "Fictitious dividend cuts in the CRSP data," Journal of Corporate Finance, Elsevier, vol. 71(C).
    11. Pesaran, M. Hashem & Schuermann, Til & Treutler, Bjorn-Jakob & Weiner, Scott M., 2006. "Macroeconomic Dynamics and Credit Risk: A Global Perspective," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 38(5), pages 1211-1261, August.
    12. Nabeel Al-Milli & Amjad Hudaib & Nadim Obeid, 2021. "Population Diversity Control of Genetic Algorithm Using a Novel Injection Method for Bankruptcy Prediction Problem," Mathematics, MDPI, vol. 9(8), pages 1-18, April.
    13. Sandrine Lardic & Claire Gauthier, 2003. "Un modèle multifactoriel des spreads de crédit : estimation sur panels complets et incomplets," Économie et Prévision, Programme National Persée, vol. 159(3), pages 53-69.
    14. Hu, Xiaolu & Shi, Jing & Wang, Lafang & Yu, Jing, 2020. "Foreign ownership in Chinese credit ratings industry: Information revelation or certification?," Journal of Banking & Finance, Elsevier, vol. 118(C).
    15. Modina, Michele & Pietrovito, Filomena & Gallucci, Carmen & Formisano, Vincenzo, 2023. "Predicting SMEs’ default risk: Evidence from bank-firm relationship data," The Quarterly Review of Economics and Finance, Elsevier, vol. 89(C), pages 254-268.
    16. Lauren Stagnol, 2015. "Designing a corporate bond index on solvency criteria," EconomiX Working Papers 2015-39, University of Paris Nanterre, EconomiX.
    17. Nadiah Amirah Nor Azhari & Suhaily Hasnan & Zuraidah Mohd Sanusi, 2020. "The Relationships Between Managerial Overconfidence, Audit Committee, CEO Duality and Audit Quality and Accounting Misstatements," International Journal of Financial Research, International Journal of Financial Research, Sciedu Press, vol. 11(3), pages 18-30, June.
    18. Nagar, Neerav & Sen, Kaustav, 2016. "Earnings management in India: Managers’ fixation on operating profits," Journal of International Accounting, Auditing and Taxation, Elsevier, vol. 26(C), pages 1-12.
    19. Lin, Hsiou-Wei William & Lo, Huai-Chun & Wu, Ruei-Shian, 2016. "Modeling default prediction with earnings management," Pacific-Basin Finance Journal, Elsevier, vol. 40(PB), pages 306-322.
    20. Vu Quang Trinh & Neelu Seetaram & Kiet Tuan Duong & Xuan Vinh Vo, 2023. "Collusive behaviour, risk and performance of tourism firms," Tourism Economics, , vol. 29(8), pages 2103-2128, December.

    More about this item

    Keywords

    Altman Z-score; Bankruptcy; Stock Exchange;
    All these keywords.

    JEL classification:

    • G1 - Financial Economics - - General Financial Markets
    • G3 - Financial Economics - - Corporate Finance and Governance
    • G33 - Financial Economics - - Corporate Finance and Governance - - - Bankruptcy; Liquidation

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eco:journ1:2017-03-43. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Ilhan Ozturk (email available below). General contact details of provider: http://www.econjournals.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.