Analysis of Altman's Model to Investigate Factors Affecting the Probability of Bankruptcy of Selected Banks in Iran
One of the basic requirements for sustainable growth and development is the existence of an efficient financial sector to finance production activities. In this regard, the present study has estimated the probability of bankruptcy of banks employing the Altman index and using evidence from the banki...
| Main Authors: | , |
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| Format: | Article |
| Language: | fas |
| Published: |
Allameh Tabataba'i University Press
2022-06-01
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| Series: | Faslnāmah-i Pizhūhish/Nāmah-i Iqtisādī |
| Subjects: | |
| Online Access: | https://joer.atu.ac.ir/article_15537_a2096b0dc386550c9130b94844ff2b23.pdf |
| Summary: | One of the basic requirements for sustainable growth and development is the existence of an efficient financial sector to finance production activities. In this regard, the present study has estimated the probability of bankruptcy of banks employing the Altman index and using evidence from the banking industry for 18 public and private banks in the period from 2016 to 2021. Using the panel data approach, the influencing factors in the probability of bankruptcy are also investigated. Estimates from the panel approach show that credit diversification is effective in reducing the probability of bankruptcy. Similar evidence shows that the probability of bankruptcy for private banks is equal to 68% and for public banks 70%. The calculation of the Herfindahl-Hirschman concentration index has also shown a value of 0.33 for Iran's private banks and 0.63 for state banks, so credits in private banks have a higher diversity than in state banks. According to the results of the research, more attention should be paid to diversifying credits in public and private banks, determining the optimal size of banks to take advantage of economies of scale, monitoring the central bank's compliance with Basel index standards and monitoring the maintenance of banks' cash balances for the unforeseen demand of the society. |
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| ISSN: | 1735-210X 2476-6453 |