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Surveillance model of going concern in banking

  • Jonathan Njoku
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    This paper aims to apply the anatomy of bank financial condition in modelling bank going concern status. The anatomic factors are market presence, macro-economic condition, deposit fragility, prudence, earnings quality, market power and capital confidence (Njoku and Inanga, 2010). Discriminant analysis was applied to the anatomic factors to indicate characteristic differences among banks likely to attract going concern opinion and the unlikely ones. The result shows that in banking landscape typified by market presence and deposit mobilisation, bank failure to effectively exploit market power and translate it into earnings is critical in hurting the going concern status. As such, market power, earnings quality, market presence and deposit mobilisation should usefully command focal attention of auditors in reaching going concern opinion.

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    File URL: http://www.inderscience.com/link.php?id=46126
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    Article provided by Inderscience Enterprises Ltd in its journal African J. of Accounting, Auditing and Finance.

    Volume (Year): 1 (2012)
    Issue (Month): 1 ()
    Pages: 40-76

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    Handle: RePEc:ids:ajaafi:v:1:y:2012:i:1:p:40-76
    Contact details of provider: Web page: http://www.inderscience.com/browse/index.php?journalID==383

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    6. Joe Peek & Eric S. Rosengren, 1996. "The use of capital ratios to trigger intervention in problem banks: too little, too late," New England Economic Review, Federal Reserve Bank of Boston, issue Sep, pages 49-58.
    7. Hendrickson, Jill M., 2000. "The impact of bank failures on local bank pricing decisions," The Quarterly Review of Economics and Finance, Elsevier, vol. 40(3), pages 401-416.
    8. Alexandra Lai, 2002. "Modelling Financial Instability: A Survey of the Literature," Working Papers 02-12, Bank of Canada.
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