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By using a total of 52 distressed and non-distressed listed companies during the period 1990 to 2000, debt to total assets was found to be significant in predicting distressed companies for the multiple discriminant analysis (MDA), logit and hazard models. It appears that the higher the debt, the higher is the probability of defaulting among the financially distressed companies. MDA identified net income growth as another predictor whereas the logit and hazard model found that return on asset (ROA) to be an important predictor. Nevertheless, the sign of the ROA coefficient differred between the two models. Furthermore, company size was also identified as a contributing factor to financially distressed companies for the hazard model.

By using a total of 52 distressed and non-distressed listed companies during the period 1990 to 2000, debt to total assets was found to be significant in predicting distressed companies for the multiple discriminant analysis (MDA), logit and hazard models. It appears that the higher the debt, the higher is the probability of defaulting among the financially distressed companies. MDA identified net income growth as another predictor whereas the logit and hazard model found that return on asset (ROA) to be an important predictor. Nevertheless, the sign of the ROA coefficient differred between the two models. Furthermore, company size was also identified as a contributing factor to financially distressed companies for the hazard model.

This study is intended to identify the predictors of financial distress for the Pakistani firms. Variables used are the financial ratios representing profitability, liquidity, leverage, and cash flows, as well as two important market factors which are size and idiosyncratic standard deviation of each firm’s stock returns (SIG). The sample consists of 290 firms stretching from 2007 to 2016 and logit regression is applied to predict financial distress. The findings reveal that profitability, liquidity, leverage, cash flow ratios, and firm size are significant, while SIG is insignificant in predicting financial distress. Results of the estimated logit model I, model II, and holdout model reveal that the models perform consistently. This study contributes to the literature by testing the market variables in relation to financial distress as these variables were ignored by the previous studies in Pakistan. Findings of this study are precise as the study covers a longer time horizon and a larger sample size.

Unstable economic conditions have an adverse impact on the financial performance of firms, leading to financial distress, which is an unfavourable situation for investors as it may affect their investment returns. Thus, this study attempted to predict financial distress and to examine the effect of financial distress on stock returns by using firms listed on Bursa Malaysia from 1990 to 2020. This study used the logit model to find the probability of bankruptcy and also as a proxy for financial distress risk in the asset pricing model. From this study, financial distress risk was found to be insignificant in pricing stock returns in all tested models. This finding demonstrates that financial distress risk does not affect stock returns since this risk may be eliminated through diversification.

Recent banking reforms in Saudi Arabia fostered the entry of foreign banks to increase competition and improve the financial stability of the Saudi banking sector. There is, however, no comprehensive econometric study which has analysed the profitability of domestic and foreign banks on a standalone and comparative basis. Present paper fills in this gap and assesses the profitability of Saudi banks using the parameters of the CAMEL framework over the period 2000-2014 using pooled OLS and fixed effect model. Our results indicate that domestic banks are more profitable than foreign banks. We also find that both foreign and domestic banks with higher capital are more profitable. Banks with a higher non-performing loan are less profitable: foreign banks carry more credit risk in their portfolio. In contrast to domestic banks, operating expenses to total income for foreign banks is significant but negatively related to profitability, indicating that cost management inefficiency adversely affect the profitability of this group. Our results also indicate that banks with larger size are less profitable. We also find that steep rise in lending activities lead to increase in the profitability of domestic banks but has adversely affected the profitability of foreign banks in the country. The findings of the study have many policy implications.

Islamic banks are playing an important role in the financial sector in various economies, especially in Islamic nations. They provide most of the banking services as are provided by the conventional banks, albeit different in nomenclature and specific characteristics. So far, however, no econometric study has been reported in the literature which analyses and compares the contribution to shareholders’ value by Islamic and conventional banks. This paper uses pooled OLS and random effect model to investigate and compare the contribution to shareholders’ value by the Islamic and conventional banks in Saudi Arabia over the period 2000-2015. Our results indicate that Islamic banks in Saudi Arabia contribute more to the shareholders’ value than conventional banks. We find that higher capital ratio and credit risk lead to a decline in shareholders’ value of the conventional banks but this is not true in the case of the Islamic banks. We also find that higher level of loans decrease the conventional banks' shareholders’ value but increase the same in the case of the Islamic banks. In contrast to Islamic banks, we find that conventional banks with higher liquidity have a lower shareholders’ value. Lastly, our results indicate that in general, shareholders’ value is associated negatively with declines in cost efficiency and bank size. Policy implications and possible strategic interventions have also been discussed.

The aim of this study is to examine the impact of board characteristics on financial distress companies. Specifically this study examines board attributes (size of board, percentage of inside directors, CEO is founder, CEO is chairman and CEO duality) and its relation with companies that experienced financial distress after controlling for leverage, market return, lagged of market return, and GDP growth. Compared with previous studies in Malaysia, this study uses PN17 criterion to select the sample and that is defines as the shareholder’s equity is less than 25% of issued and paid-up capital of a firm. Using a data, the results show size and CEO-founder are negatively significantly related to distress while CEO duality and fraction of independent director affect distress positively. This study could be used to measure the effectiveness of The Malaysian Code on Corporate Governance (MCCG). This study is also useful to directors, investors and authorities who would want to know which corporate governance factors explain distress.

Recent banking reforms in Saudi Arabia fostered the entry of foreign banks to increase competition and improve the financial stability of the Saudi banking sector. There is, however, no comprehensive econometric study which has analysed the profitability of domestic and foreign banks on a standalone and comparative basis. Present paper fills in this gap and assesses the profitability of Saudi banks using the parameters of the CAMEL framework over the period 2000-2014 using pooled OLS and fixed effect model. Our results indicate that domestic banks are more profitable than foreign banks. We also find that both foreign and domestic banks with higher capital are more profitable. Banks with a higher non-performing loan are less profitable: foreign banks carry more credit risk in their portfolio. In contrast to domestic banks, operating expenses to total income for foreign banks is significant but negatively related to profitability, indicating that cost management inefficiency adversely affect the profitability of this group. Our results also indicate that banks with larger size are less profitable. We also find that steep rise in lending activities lead to increase in the profitability of domestic banks but has adversely affected the profitability of foreign banks in the country. The findings of the study have many policy implications. Keywords: Profitability, Foreign banks, Domestic banks, CAMELs model, Saudi Arabia JEL Classifications: G20; G21, G01, G24, C23; L25, E40, O16

Recent banking reforms in Saudi Arabia fostered the entry of foreign banks to increase competition and improve the financial stability of the Saudi banking sector. There is, however, no comprehensive econometric study which has analysed the profitability of domestic and foreign banks on a standalone and comparative basis. Present paper fills in this gap and assesses the profitability of Saudi banks using the parameters of the CAMEL framework over the period 2000-2014 using pooled OLS and fixed effect model. Our results indicate that domestic banks are more profitable than foreign banks. We also find that both foreign and domestic banks with higher capital are more profitable. Banks with a higher non-performing loan are less profitable: foreign banks carry more credit risk in their portfolio. In contrast to domestic banks, operating expenses to total income for foreign banks is significant but negatively related to profitability, indicating that cost management inefficiency adversely affect the profitability of this group. Our results also indicate that banks with larger size are less profitable. We also find that steep rise in lending activities lead to increase in the profitability of domestic banks but has adversely affected the profitability of foreign banks in the country. The findings of the study have many policy implications. Keywords: Profitability, Foreign banks, Domestic banks, CAMELs model, Saudi Arabia JEL Classifications: G20; G21, G01, G24, C23; L25, E40, O16

Recent banking reforms in Saudi Arabia fostered the entry of foreign banks to increase competition and improve the financial stability of the Saudi banking sector. There is, however, no comprehensive econometric study which has analysed the profitability of domestic and foreign banks on a standalone and comparative basis. Present paper fills in this gap and assesses the profitability of Saudi banks using the parameters of the CAMEL framework over the period 2000-2014 using pooled OLS and fixed effect model. Our results indicate that domestic banks are more profitable than foreign banks. We also find that both foreign and domestic banks with higher capital are more profitable. Banks with a higher non-performing loan are less profitable: foreign banks carry more credit risk in their portfolio. In contrast to domestic banks, operating expenses to total income for foreign banks is significant but negatively related to profitability, indicating that cost management inefficiency adversely affect the profitability of this group. Our results also indicate that banks with larger size are less profitable. We also find that steep rise in lending activities lead to increase in the profitability of domestic banks but has adversely affected the profitability of foreign banks in the country. The findings of the study have many policy implications. Keywords: Profitability, Foreign banks, Domestic banks, CAMELs model, Saudi Arabia JEL Classifications: G20; G21, G01, G24, C23; L25, E40, O16

Islamic banks are playing an important role in the financial sector in various economies, especially in Islamic nations. They provide most of the banking services as are provided by the conventional banks, albeit different in nomenclature and specific characteristics. So far, however, no econometric study has been reported in the literature which analyses and compares the contribution to shareholders' value by Islamic and conventional banks. This paper uses pooled OLS and random effect model to investigate and compare the contribution to shareholders' value by the Islamic and conventional banks in Saudi Arabia over the period 2000-2015. Our results indicate that Islamic banks in Saudi Arabia contribute more to the shareholders' value than conventional banks. We find that higher capital ratio and credit risk lead to a decline in shareholders' value of the conventional banks but this is not true in the case of the Islamic banks. We also find that higher level of loans decrease the conventional banks' shareholders' value but increase the same in the case of the Islamic banks. In contrast to Islamic banks, we find that conventional banks with higher liquidity have a lower shareholders' value. Lastly, our results indicate that in general, shareholders' value is associated negatively with declines in cost efficiency and bank size. Policy implications and possible strategic interventions have also been discussed.

Islamic banks are playing an important role in the financial sector in various economies, especially in Islamic nations. They provide most of the banking services as are provided by the conventional banks, albeit different in nomenclature and specific characteristics. So far, however, no econometric study has been reported in the literature which analyses and compares the contribution to shareholders' value by Islamic and conventional banks. This paper uses pooled OLS and random effect model to investigate and compare the contribution to shareholders' value by the Islamic and conventional banks in Saudi Arabia over the period 2000-2015. Our results indicate that Islamic banks in Saudi Arabia contribute more to the shareholders' value than conventional banks. We find that higher capital ratio and credit risk lead to a decline in shareholders' value of the conventional banks but this is not true in the case of the Islamic banks. We also find that higher level of loans decrease the conventional banks' shareholders' value but increase the same in the case of the Islamic banks. In contrast to Islamic banks, we find that conventional banks with higher liquidity have a lower shareholders' value. Lastly, our results indicate that in general, shareholders' value is associated negatively with declines in cost efficiency and bank size. Policy implications and possible strategic interventions have also been discussed.

Islamic banks are playing an important role in the financial sector in various economies, especially in Islamic nations. They provide most of the banking services as are provided by the conventional banks, albeit different in nomenclature and specific characteristics. So far, however, no econometric study has been reported in the literature which analyses and compares the contribution to shareholders' value by Islamic and conventional banks. This paper uses pooled OLS and random effect model to investigate and compare the contribution to shareholders' value by the Islamic and conventional banks in Saudi Arabia over the period 2000-2015. Our results indicate that Islamic banks in Saudi Arabia contribute more to the shareholders' value than conventional banks. We find that higher capital ratio and credit risk lead to a decline in shareholders' value of the conventional banks but this is not true in the case of the Islamic banks. We also find that higher level of loans decrease the conventional banks' shareholders' value but increase the same in the case of the Islamic banks. In contrast to Islamic banks, we find that conventional banks with higher liquidity have a lower shareholders' value. Lastly, our results indicate that in general, shareholders' value is associated negatively with declines in cost efficiency and bank size. Policy implications and possible strategic interventions have also been discussed.

The main objective of the paper is to find out whether bankruptcy risk is a systematic risk. In particular, we investigate the contribution of size, bookto-market, excess market returns and bankruptcy probability in explaining returns. We allocate stocks into portfolios according to the probability of bankruptcy from the hazard model. Results show that bankruptcy risk is not a systematic risk. The results consistently show that excess market returns and size have strong power to explain returns in the UK for the period from 1988 to 1997. Book-to-market and bankruptcy risk only matt er in portfolios with higher probability of bankruptcy. Keyword: Bankruptcy risk, bankruptcy probability, hazard model. JEL Classification: G12, G33

The main objective of the paper is to find out whether bankruptcy risk is a systematic risk. In particular, we investigate the contribution of size, bookto-market, excess market returns and bankruptcy probability in explaining returns. We allocate stocks into portfolios according to the probability of bankruptcy from the hazard model. Results show that bankruptcy risk is not a systematic risk. The results consistently show that excess market returns and size have strong power to explain returns in the UK for the period from 1988 to 1997. Book-to-market and bankruptcy risk only matt er in portfolios with higher probability of bankruptcy. Keyword: Bankruptcy risk, bankruptcy probability, hazard model. JEL Classification: G12, G33