Purpose-The incidence of important bankruptcy cases has led to a growing interest in corporate bankruptcy prediction models since the 1960s. Several past reviews of this literature are now either out-of-date or too narrowly focused. They do not provide a complete comparison of the many different approaches towards bankruptcy prediction and have also failed to provide a solution to the problem of model choice in empirical application. Seeks to address this issue. Design/methodology/approach-Through an extensive literature review, this study provides a comprehensive analysis of the methodologies and empirical findings from these models in their applications across ten different countries. Findings-The predictive accuracies of different models seem to be generally comparable, although artificially intelligent expert system models perform marginally better than statistical and theoretical models. Individually, the use of multiple discriminant analysis (MDA) and logit models dominates the research. Given that financial ratios have been dominant in most research to date, it may be worthwhile increasing the variety of explanatory variables to include corporate governance structures and management practices while developing the research model. Similarly, evidence from past research suggests that small sample size, in such studies, should not impede future research but it may lead researchers away from methodologies where large samples are critically necessary. Originality/value-It is hoped that this study will be the most comprehensive to-date review of the literature in the field. The study also provides a unique ranking system, the first ever of its kind, to solve the problem of model choice in empirical application of bankruptcy prediction models.
This research deals with the evolution of and growing markets for sukuk (Islamic asset‐based securities) in emerging economies. The types of sukuk and their liquidity, credit, and market risk are discussed. Further refinements of the structures with embedded call and put options are analyzed in pursuit of risk management mechanisms that are, thus far, absent. The research is an attempt to discuss the risks of these growing financial assets and their role in the mobilization of resources and development of debt markets in emerging economies. © 2007 Wiley Periodicals, Inc.
It is widely recognised that the human development index (HDI) does not totally capture the rich content of the human development concept, necessitating a more adequate measure of human development. This paper introduces an ethics-augmented human development index (E-HDI) as a new indicator of socio-economic change and development. The E-HDI incorporates freedom, faith, environmental concerns and the institution of family in the HDI and ranks countries of the world accordingly. It is envisaged to be of practical use in national policy making and may also be related to agenda of the bilateral and international development agencies. Just as the HDI has managed to shift discussions beyond gross national product, the E-HDI is expected to inject ethical concerns more explicitly into policy making in the contexts in which the human development reports are used.
Conceptually, an Islamic bank has an equity-based capital structure, dominated by shareholders' equity and investment deposits based on profit and loss sharing [PLS]. There is no need for capital adequacy regulations if the Islamic banks are structured as pure PLS-based organizations. However, due to informational asymmetry and risk aversion by investors, there currently exist fixed claim liabilities on the Islamic banking balance sheets. This necessitates the imposition of capital adequacy requirements, which aim at maintaining systemic stability by achieving two fundamental objectives. First, capital regulations should protect risk-averse (assumed unsophisticated) depositors. This requires a minimum equity capital cushion and an optimal assets-liabilities composition. Second, capital regulations should give the right incentives to shareholders to promote prudent behaviour by the banks. This requires analysis of the effect of financial participation by shareholders on Pareto optimality, and analysis of potential behaviour by shareholders when facing financial uncertainty. This paper combines modern banking theory and principal-agent analysis to develop a framework for an optimal capital structure for JEL classification: E58, G28, G32, and G38
This paper assesses the progress towards the intra-regional integration among the GCC countries. We find that although there is limited trade integration in the region as a whole, there are specific countries (for example Bahrain and Oman) that are significantly integrated with at least one trade partner from within the region. The paper argues that the GCC region will have to create a consensus on the trade barriers on the imports from outside the region if progress towards the intra-regional integration is to be increased. Copyright Blackwell Publishers Ltd 2001.
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