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Analysis Z-score to Predict Bankruptcy in Banks Listed in Indonesia Stock Exchange

Author

Listed:
  • Muammar Khaddafi

    (Department of Accounting, Faculty of Economics, Universitas Malikussaleh, Lhokseumawe, Indonesia,)

  • Falahuddin

    (Department of Accounting, Faculty of Economics, Universitas Malikussaleh, Lhokseumawe, Indonesia,)

  • Mohd. Heikal

    (Department of Management, Faculty of Economics, Universitas Malikussaleh, Lhokseumawe, Indonesia,)

  • Ayu Nandari

    (Department of Accounting, Faculty of Economics, Universitas Malikussaleh, Lhokseumawe, Indonesia.)

Abstract

This study aimed to test the predictions of bankruptcy in the banking companies listed in the Indonesia Stock Exchange using the Altman Z-score to see how big the bankruptcy prediction during period of 2011-2013 in the banking Industry. Calculating each bank's bankruptcy prediction on each 29 banks institution. The data used in this study is the annual financial statements that are Exchange Indonesia. The analysis technique used is a bankruptcy prediction model Altman Z-score. By using the formula Z-score = 1.2X1 + 1.4 X2 + 3.3X3 + 0.6 + 1.0 X4 X5. The criteria for assessing a Z-score > 2.99 categorized as a very healthy company. 1.81

Suggested Citation

  • Muammar Khaddafi & Falahuddin & Mohd. Heikal & Ayu Nandari, 2017. "Analysis Z-score to Predict Bankruptcy in Banks Listed in Indonesia Stock Exchange," International Journal of Economics and Financial Issues, Econjournals, vol. 7(3), pages 326-330.
    • Handle: RePEc:eco:journ1:2017-03-43
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    References listed on IDEAS

    as
    1. Edward I. Altman, 1968. "Financial Ratios, Discriminant Analysis And The Prediction Of Corporate Bankruptcy," Journal of Finance, American Finance Association, vol. 23(4), pages 589-609, September.
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    Cited by:

    1. Ajaan Rahman Khan & Chinmoy Das Gupta & Md. Ali Ashraf, 2021. "Relationship Between Banking Performance and Financial Distress: A Study on Banks of Bangladesh," Issues in Economics and Business, Macrothink Institute, vol. 7(1), pages 15-25, June.
    2. Munene Halldess Nguta & Ken Mugambi, 2021. "Analysis of the Related Party Transactions interms of managerial and financial issues for the Kenyan Savings and Credit Cooperatives," International Journal of Finance & Banking Studies, Center for the Strategic Studies in Business and Finance, vol. 10(1), pages 48-61, January.
    3. Shailesh Rastogi & Arpita Sharma & Geetanjali Pinto & Venkata Mrudula Bhimavarapu, 2022. "A literature review of risk, regulation, and profitability of banks using a scientometric study," Future Business Journal, Springer, vol. 8(1), pages 1-17, December.
    4. Subrata Deb Nath & Prasenjit Kumer Biswas & Md. Aminur Rashid & Munna Rani Biswas, 2020. "Financial Distress Prediction through Altman Z-Score Model: A Case Study of State Owned Commercial Banks of Bangladesh," Indian Journal of Commerce and Management Studies, Educational Research Multimedia & Publications,India, vol. 11(3), pages 60-67, September.
    5. Halldess Nguta Munene & James Ndegwa & Thomas Senaji & Kenneth M. Mugambi, 2020. "Influence of Board Characteristics on Financial Distress of Deposit Taking SACCOs in Nairobi County, Kenya," International Journal of Finance & Banking Studies, Center for the Strategic Studies in Business and Finance, vol. 9(4), pages 97-110, October.

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    More about this item

    Keywords

    Altman Z-score; Bankruptcy; Stock Exchange;
    All these keywords.

    JEL classification:

    • G1 - Financial Economics - - General Financial Markets
    • G3 - Financial Economics - - Corporate Finance and Governance
    • G33 - Financial Economics - - Corporate Finance and Governance - - - Bankruptcy; Liquidation

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