What are the factors financial distress? The National Private Commercial Banks in Indonesia Case

  • Nelmida Nelmida STIE Indonesia Banking School
Keywords: Keywords: Potential bankruptcy; National Private Commercial Banks; and Factor Analysis; and Altman Z Score model

Abstract

This study employs to identify the determinant factors of the potential bankruptcy of National Private Commercial Banks listed on the Indonesia Stock Exchange. The type of data is secondary data derived from the company's financial statements from 2015-2017. The population of this research is all companies of National Private Commercial Banks listed on the Indonesia Stock Exchange with the purposive sampling technique of sampling 40 companies. The analytical method used to identify the potential for bankruptcy is used the modified Altman Z Score model for non-manufacturing companies in developing capital markets. To identify the determinants of potential bankruptcy is used the Factor Analysis method. Based on the analysis, it is obtained that the potential bankruptcy of the company as a sample has a value of Z Score> 2.60 (including safe zone or healthy category). Then based on the results of analysis factors from the 10 variables studied only 9 variables that found the requirements as a determinant of potential bankruptcy, namely: CAR, NPL, ROA, NIM, BOPO, LDR, CR, ECTA, and TATG variables are divided into 2 factors, namely factor 1 which consists of variables CAR, NIM, LDR, CR, ECTA, and TATG which are named Capital variables and Liquidity, while the one that includes factor 2 consists of variables NPL, ROA, and BOPO which are given variable names Asset Quality and Earning.

Keywords: Potential bankruptcy; National Private Commercial Banks; and Factor Analysis; and Altman Z Score model

References

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Published
2019-05-13
How to Cite
Nelmida, N. (2019). What are the factors financial distress? The National Private Commercial Banks in Indonesia Case. International Journal of Entrepreneurial Research, 2(2), 13-20. https://doi.org/10.31580/ijer.v2i2.918
Section
Articles