Liquidity, Leverage, and Lehman: A Structural Analysis of Financial Institutions in Crisis

Seberapa Efektif Kualitas Auditor yang Memoderasi Hubungan Antara Rasio Keuangan dan Kesulitan Keuangan

“…This research shows that there is a positive correlation between the debt ratio and the leverage ratio represented by financial distress (Alifiaha, et al, 2013). There were several studies which have been shown in a positive relationship such as Chen, et al (2014) showed the crisis in the company happened when financial distress arises because the value of assets is depressed and did not adequately fulfill long-term obligations, and Lifiaha, et al (2013) in consumer product sector companies in Malaysia and Husna thus also according to Rahman (2012) Islamic banks in Malaysia showed the debt ratios must be considered carefully in order the companies have not run into financial distress. Akhtar, et al (2012) also mentioned that companies that have an increase in company risk which includes leverage, will require high profitability to cover their debts, but often when the level of leverage is too high it will cause companies to run the risk of default and financial distress.…”

Selecting Various Industrial Competitors Affect the Risk Level of Viet Nam Hardware Industry During and After the Global Crisis 2007-2011

“…Daly and Hanh Phan (2013) investigated the competitive structure of the banking industries in five emerging asian countries including Viet Nam and showed that the global financial crisis affected dramatically the competition of banking system in emerging Asian countries. Chen et al (2013) supported regulators' suspicions that over-reliance on short-term funding and insufficient collateral compounded the effects of dangerously high leverage and resulted in undercapitalization and excessive risk exposure for Lehman Brothers. The model reinforces the importance of the relationship between capital structure and risk management.…”

Uncertain times and early predictions of bank failure

“…Studies of bank failure follow this pattern, as researchers try to uncover the unique characteristics of banks that fail during a crisis. Chen, Chidambaran, Imerman, and Sopranzetti (), for example, undertake a detailed analysis of the debt maturity structure of Lehman Brothers to understand the failure of the investment bank in 2008. They observe that in 2008, Lehman was increasingly rolling their short‐term debt forward, which would create liquidity problems if they were unable to refinance.…”

“…Based on the firm's liability structure, the authors use changes in the firm's market equity value and volatility to predict at the end of March 2008 that Lehman was 73% likely to default by year‐end 2008, relative to a 33% chance at the beginning of the year. Chen et al.’s () results indicate fundamentals (i.e., high leverage, over reliance on short‐term funding, and insufficient collateral) were the causes of Lehman's failure.…”