Financial ratios as one of the measurement tools in assessing rural bank fragility

Date of Publication

2016

Document Type

Bachelor's Thesis

Degree Name

Bachelor of Science in Management of Financial Institutions

Subject Categories

Finance and Financial Management

College

Ramon V. Del Rosario College of Business

Department/Unit

Financial Management

Thesis Adviser

Tomas Tiu

Defense Panel Member

Rene Betita

Dexter Ginete

Michelle Brendy Ocampo Tan

Abstract/Summary

The number of rural banks have recently been declining for the past few years. There are a number of factors that can contribute to a rural bank's bankruptcy such as illiquidity and insolvency, mismanagement or lack of management, scam, poor governance, and lack of business plan. This paper measures rural bank fragility by using financial ratios as one of the measurement tools. The logistic regression model, otherwise known as the LOGIT model, was utilized in this study since this is the tool popularly used by authors such as Hanh and Montgomery, Zaghdoudi, and Pervan I., Pervan M., and Vukoja, in predicting rural bank failure using financial ratios. The study was able to find out the ratios that are significant in measuring the probability of rural bank failure from the select ratios deemed to be mostly used by financial institutions. Furthermore, the logistic regression model was proven to be a good tool in predicting the probability of rural bank failure by using the Hosmer-Lemeshow test. In addition to that, the entry of non-rural banks in areas where rural banks operate does not directly affect the probability of rural bank failure.

Abstract Format

html

Language

English

Format

Print

Accession Number

TU19471

Shelf Location

Archives, The Learning Commons, 12F, Henry Sy Sr. Hall

Physical Description

iv, 81, 4 leaves : illustrations (some color) ; 28 cm. + 1 computer disc ; 4 3/4 in.

Keywords

Banks and banking--Philippines; Ratio analysis

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