APPLICABILITY OF ALTMAN MODEL IN PREDICTING FINANCIAL DISTRESS: Evidence from Rural Bank in Indonesia
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Date
2020
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Publisher
Solid State Technology Volume: 63 Issue: 3
Abstract
This study aims to know the applicability of Altman Model in predicting financial distress evidence rural bank in East Java, Indonesia. The method used in this study uses logit. The data used are secondary data obtained from Bank publication reports during period 2009 - 2018. The population used in this study is rural banks in East Java and sample selection based on purposive sampling. The results showed that capital, liquidity, profitability and productivity have significant influence to financial distress bank. This finding is consistent with finding’s Altman (2000) in commercial bank. Rural banks also need to pay attention to solvency so banks can carry out their intermediary role. Channeling credit optimally and keeping liquidity far from the threshold to increase profits. Accordingly, banks will avoid financial distress. This research will be useful in knowing the applicability of Altman Model in predicting financial distress, especially rural banks from existing models based on existing parameters.
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Keywords
Risk, Financial Performance, Rural Banks