The use of accounting data to predict bank financial distress in MENA countries

Isabelle Distinguin, Iftekhar Hasan and Amine Tarazi

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Abstract: Using an innovative approach of following the downgrade or credit rating decisions by rating agencies, this paper develops an early-warning system of bank financial distress and critically evaluates the reliability and stability of the potential indicators or factors of banks in 13 emerging economies in the MENA region. Evidence portrays that the capital, asset quality, earnings, and liquidity ratios are accurate accounting indicators to predict bank financial distress. However, we observe that influence of factors vary across size of the banks as accounting information does not appear reliable to predict bank financial distress of small banks. By contrast, the balance sheet structure of banks (both the asset side and liability side) does not affect the accuracy of accounting indicators.

Keywords: Ratings; Financial distress; Bank risk; MENA Countries (search for similar items in EconPapers)
Date: 2010
Note: View the original document on HAL open archive server: https://hal.science/hal-01098715v1
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Citations: View citations in EconPapers (4)

Published in International Journal of Banking, Accounting and Finance, 2010, 2 (4), pp.332. ⟨10.1504/IJBAAF.2010.037154⟩

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Related works:
Working Paper: The Use of Accounting Data to Predict Bank Financial Distress in MENA Countries (2011)
Journal Article: The use of accounting data to predict bank financial distress in MENA countries (2010)
Working Paper: The Use of Accounting Data to Predict Bank Financial Distress in MENA Countries (2010)
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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-01098715

DOI: 10.1504/IJBAAF.2010.037154

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