Bank Failures: Review and Comparison of Prediction Models

38 Pages Posted: 11 Dec 2020

See all articles by Alberto Citterio

Alberto Citterio

University of Insubria - Department of Economics

Date Written: October 20, 2020

Abstract

The interest in banks’ bankruptcy prediction has rapidly increased especially after the 2008-2009 global financial crisis. The relevant consequences of bankruptcy cases have indeed highlighted the necessity for managers and regulators to develop and adopt appropriate early warning systems. The purpose of this paper is therefore to conduct a literature review of recent empirical contributions on bank’s default prediction by analyzing three underlying aspects: definition of default and financial distress, application of statistical and intelligent techniques, variables selection. The review also proposes some possible upgrades to promote future research on the topic, i.e. pointing out the potential role of non-financial information as good default predictors.

Keywords: Bank Failures, Financial Distress, Bankruptcy Prediction, Prediction Models, Financial Indicators, Non-Financial Indicators

JEL Classification: G33, G21, G01, C53

Suggested Citation

Citterio, Alberto, Bank Failures: Review and Comparison of Prediction Models (October 20, 2020). Available at SSRN: https://ssrn.com/abstract=3719997 or http://dx.doi.org/10.2139/ssrn.3719997

Alberto Citterio (Contact Author)

University of Insubria - Department of Economics ( email )

Via Monte Generoso 71
Varese, 21 100
Italy

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