Modelling Corporate Sector Distress in India
Published By: RBI on eSS | Published Date: December , 2016The paper attempts to formulate a model to predict corporate financial distress of
non-government non-financial public limited companies and estimate distressed
bank debt due to the sample companies for the period 2006-07 to 2013-14. The
model estimates probability of a company being financially distressed in the following
year using the multivariate logistic regression based on three financial ratios viz.,
long term liabilities to total assets, operating profits to total liabilities, and current
assets to current liabilities. The model was tested for some stressed
industries/companies and was found to capture the underlying distress. Distressed
bank debt for the sample companies was found to be increasing since 2011-12. [RBI WPS (DEPR): 10 / 2016].
Author(s): Manjusha Senapathi, Saptarshi Ghosal | Posted on: Dec 27, 2016 | Views() | Download (390)