Developing a Decision Rule to Predict Failure: The Case of Savings and Loan Associations.

Posted: 28 May 2017

See all articles by Phillip Fuller

Phillip Fuller

Jackson State University; Jackson State University - Economics and Finance

Theodor Kohers

Mississippi State University - College of Business

Date Written: January 1, 1994

Abstract

The relative costs of misclassifying institutions by their financial health is an issue that concerns researchers. In this paper, a model and decision rule are developed that improve the probability of identifying those Savings and Loans that are predicted not to fail, but are actually failing. For obvious reasons, stakeholders in those institutions are very much interested in avoiding this type I error. The study also makes available evidence that the examination of Z-scores can be useful in identifying other financial institutions that may experience financial failure.

Keywords: financial institutions, failure, prediction model, financial crisis, relative cost

JEL Classification: G01, G18, G21, G33, G38

Suggested Citation

Fuller, Phillip and Kohers, Theodor, Developing a Decision Rule to Predict Failure: The Case of Savings and Loan Associations. (January 1, 1994). Journal of Economics and Finance, Vol. 18, No. 1, 1994, Available at SSRN: https://ssrn.com/abstract=2973674

Phillip Fuller (Contact Author)

Jackson State University ( email )

1400 John R. Lynch St
Jackson, MS 39217
United States

Jackson State University - Economics and Finance ( email )

Jackson, MS 39217
United States

Theodor Kohers

Mississippi State University - College of Business ( email )

Finance and International Business
Mississippi State, MS 39762-0964
United States
662-325-2341 (Phone)
662-325-1977 (Fax)

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