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Probability of Bank Failure: The Russian Case

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  • Konstandina Natalia

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    A question of explaining bank failures constitutes perhaps one of the greatest interest to banks' clients, policy-makers and regulators. Not surprisingly, for a long time, this question has been a challenge for theoretical and empirical economists. In this paper we investigate which factors affect soundness of a bank, taking into consideration micro level data, as well as macro level component. We also employ efficiency estimate, obtained with the help of DEA, to account for the quality of management. Then we use logit model and proportional hazard model with efficiency component. We find that efficiency element, together with size and regional belonging, are highly significant in all specifications, while macro variables did not seem to influence failures significantly.

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    Paper provided by EERC Research Network, Russia and CIS in its series EERC Working Paper Series with number 06-01e.

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    Date of creation: 13 Feb 2006
    Handle: RePEc:eer:wpalle:06-01e
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