Assessing the Probability of Financial Distress in Commercial Banks of India

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Authors

  • Shveta Singh
     Assistant Professor, Haryana School of Business, Guru Jambheshwar University of Science and Technology, Hisar ,IN
  • Anita Makkar
     Junior Research Fellow (UGC), Haryana School of Business, Guru Jambheshwar University of Science and Technology, Hisar ,IN

Keywords:

Distress, Crisis, Bankruptcy, Commercial Banks
Banking and Investment

Abstract

The present paper attempts to assess the probability of financial distress in 46 Indian commercial banks covering 26 public sector banks and 20 private sector banks for the period of 2005-06 to 2011-12. Using Z-score test for four different ratios namely, working capital to total assets, retained earnings to total assets, earnings before interest and taxes to total assets and equity to total asset, the study finds that all commercial banks in India are distress free except three banks. There is a significant difference in the value of Z-score of public and private sector banks. The study also concludes that there is consistency in the performance of public sector banks while there is much variation in the performance of private sector banks.

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Published

2015-03-16

How to Cite

Singh, S., & Makkar, A. (2015). Assessing the Probability of Financial Distress in Commercial Banks of India. Journal of Business Thought, 5, 126–137. Retrieved from https://informaticsjournals.co.in/index.php/jbt/article/view/21217

Issue

Volume 5, April 2014-March 2015

Section

Articles

License

All the articles published in JBT are distributed under a creative commons license. The journal allows the author(s) to hold the copyright of their work (all usages allowed except for commercial purpose).
Received 2018-05-16
Accepted 2018-05-16
Published 2015-03-16

 

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