Bankruptcy profile of the Islamic and conventional banks in Malaysia: a post-crisis period analysis

This study identified that accounting for endogeneity in bankruptcy forecasting models have been widely over-sighted. This study used Altman�s bankruptcy forecasting model to examine bankruptcy rates of the Islamic and conventional banks in Malaysia. Data for this study were collected from the pos...

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Main Authors: Jan, A., Marimuthu, M., Shad, M.K., ur-Rehman, H., Zahid, M., Jan, A.A.
Format: Article
Institution: Universiti Teknologi Petronas
Record Id / ISBN-0: utp-eprints.22148 /
Published: 2019
Online Access: https://www.scopus.com/inward/record.uri?eid=2-s2.0-85028851267&doi=10.1007%2fs10644-017-9220-7&partnerID=40&md5=8e40d198ee0e2a81cb3c3a9a6af12ae9
http://eprints.utp.edu.my/22148/
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spelling utp-eprints.221482019-02-28T05:50:58Z Bankruptcy profile of the Islamic and conventional banks in Malaysia: a post-crisis period analysis Jan, A. Marimuthu, M. Shad, M.K. ur-Rehman, H. Zahid, M. Jan, A.A. This study identified that accounting for endogeneity in bankruptcy forecasting models have been widely over-sighted. This study used Altman�s bankruptcy forecasting model to examine bankruptcy rates of the Islamic and conventional banks in Malaysia. Data for this study were collected from the post-crisis period 2009�2013. The results showed that the Islamic banks in Malaysia were more bankrupt as compared to the conventional banks. Hence, the claim of Islamic banks is in the stark contrast to the phenomena of being more shock-resilient to the financial crisis due to their Shariah compliance. Furthermore, the results of multiple regression analysis indicated that profitability possesses the highest explanatory power in reducing bankruptcy. However, the statistical tests Wu-Hausman and Durbin-Score identified profitability as an endogenous variable in Altman�s model, which this study addressed with an instrumental variable. Thus, this study draws a conclusion that consideration of endogeneity in bankruptcy forecasting is essential, or else the results could be misleading. The results of the study lend credence to the researchers, policy-makers, and practitioners for accurate bankruptcy forecasting. © 2017, Springer Science+Business Media, LLC. 2019 Article NonPeerReviewed https://www.scopus.com/inward/record.uri?eid=2-s2.0-85028851267&doi=10.1007%2fs10644-017-9220-7&partnerID=40&md5=8e40d198ee0e2a81cb3c3a9a6af12ae9 Jan, A. and Marimuthu, M. and Shad, M.K. and ur-Rehman, H. and Zahid, M. and Jan, A.A. (2019) Bankruptcy profile of the Islamic and conventional banks in Malaysia: a post-crisis period analysis. Economic Change and Restructuring, 52 (1). pp. 67-87. http://eprints.utp.edu.my/22148/
institution Universiti Teknologi Petronas
collection UTP Institutional Repository
description This study identified that accounting for endogeneity in bankruptcy forecasting models have been widely over-sighted. This study used Altman�s bankruptcy forecasting model to examine bankruptcy rates of the Islamic and conventional banks in Malaysia. Data for this study were collected from the post-crisis period 2009�2013. The results showed that the Islamic banks in Malaysia were more bankrupt as compared to the conventional banks. Hence, the claim of Islamic banks is in the stark contrast to the phenomena of being more shock-resilient to the financial crisis due to their Shariah compliance. Furthermore, the results of multiple regression analysis indicated that profitability possesses the highest explanatory power in reducing bankruptcy. However, the statistical tests Wu-Hausman and Durbin-Score identified profitability as an endogenous variable in Altman�s model, which this study addressed with an instrumental variable. Thus, this study draws a conclusion that consideration of endogeneity in bankruptcy forecasting is essential, or else the results could be misleading. The results of the study lend credence to the researchers, policy-makers, and practitioners for accurate bankruptcy forecasting. © 2017, Springer Science+Business Media, LLC.
format Article
author Jan, A.
Marimuthu, M.
Shad, M.K.
ur-Rehman, H.
Zahid, M.
Jan, A.A.
spellingShingle Jan, A.
Marimuthu, M.
Shad, M.K.
ur-Rehman, H.
Zahid, M.
Jan, A.A.
Bankruptcy profile of the Islamic and conventional banks in Malaysia: a post-crisis period analysis
author_sort Jan, A.
title Bankruptcy profile of the Islamic and conventional banks in Malaysia: a post-crisis period analysis
title_short Bankruptcy profile of the Islamic and conventional banks in Malaysia: a post-crisis period analysis
title_full Bankruptcy profile of the Islamic and conventional banks in Malaysia: a post-crisis period analysis
title_fullStr Bankruptcy profile of the Islamic and conventional banks in Malaysia: a post-crisis period analysis
title_full_unstemmed Bankruptcy profile of the Islamic and conventional banks in Malaysia: a post-crisis period analysis
title_sort bankruptcy profile of the islamic and conventional banks in malaysia: a post-crisis period analysis
publishDate 2019
url https://www.scopus.com/inward/record.uri?eid=2-s2.0-85028851267&doi=10.1007%2fs10644-017-9220-7&partnerID=40&md5=8e40d198ee0e2a81cb3c3a9a6af12ae9
http://eprints.utp.edu.my/22148/
_version_ 1741196575800033280
score 11.62408

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