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Modelling Corporate Sector Distress in India

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  • Manjusha Senapathi
  • Saptarshi Ghosal

Abstract

The paper attempts to formulate a model to predict corporate financial distress of non-government non-financial public limited companies and estimate distressed bank debt due to the sample companies for the period 2006-07 to 2013-14. The model estimates probability of a company being financially distressed in the following year using the multivariate logistic regression based on three financial ratios viz., long term liabilities to total assets, operating profits to total liabilities, and current assets to current liabilities. The model was tested for some stressed industries/companies and was found to capture the underlying distress. Distressed bank debt for the sample companies was found to be increasing since 2011-12. [RBI WPS (DEPR): 10 / 2016].

Suggested Citation

  • Manjusha Senapathi & Saptarshi Ghosal, 2016. "Modelling Corporate Sector Distress in India," Working Papers id:11540, eSocialSciences.
    • Handle: RePEc:ess:wpaper:id:11540
    Note: Institutional Papers
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    References listed on IDEAS

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    Cited by:

    1. Bose, Udichibarna & Filomeni, Stefano & Mallick, Sushanta, 2021. "Does bankruptcy law improve the fate of distressed firms? The role of credit channels," Journal of Corporate Finance, Elsevier, vol. 68(C).

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