Predicting corporate restructuring and financial distress in banks: The case of the Swiss banking industry

Daniel Boos, Nikolaos Karampatsas, Wolfgang Garn, Lampros Stergioulas

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Abstract

The global financial crisis of 2007–2009 is widely regarded as the worst since the Great Depression and threatened the global financial system with a total collapse. This article distinguishes itself from the vast literature of bankruptcy, bank failure, and bank exit prediction models by introducing novel categorical parameters inspired by Switzerland’s banking landscape. We evaluate data from 274 banks in Switzerland from 2007 to 2017 using generalized linear model logit and multinomial logit regressions and examine the determinants of corporate restructuring and financial distress. We complement our results with a robustness test via a Bayesian inference framework. We find that total assets and net interest margin affect bank exit and mergers and acquisitions, and that banks operating in the Zurich area have a higher likelihood of exiting and becoming takeover targets relative to banks operating in the Geneva area.
Original languageEnglish
Number of pages37
JournalJournal of Financial Research
Volume(In-Press)
Early online date20 Dec 2023
DOIs
Publication statusE-pub ahead of print - 20 Dec 2023

Bibliographical note

This is an open access article under the terms of the Creative Commons Attribution License, which permits use, distribution and reproduction in any medium, provided the original work is properly cited.

Keywords

  • bank exits
  • bank failure prediction
  • multiple criteria analysis

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