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Article
Publication date: 1 April 2024

Ahmad Hidayat bin Md Nor, Aishath Muneeza and Magda Mohsin

This study aims to develop a comprehensive insolvency model tailored to Islamic banks, ensuring alignment with Shariah principles throughout pre-insolvency, bankruptcy and…

Abstract

Purpose

This study aims to develop a comprehensive insolvency model tailored to Islamic banks, ensuring alignment with Shariah principles throughout pre-insolvency, bankruptcy and post-bankruptcy stages.

Design/methodology/approach

The research adopts a qualitative research method, using a desktop research approach. Primary sources and secondary sources are examined to gather information and draw conclusions.

Findings

This study presents a comprehensive insolvency model designed for Islamic banks, rooted in Shariah principles. The model covers pre-insolvency, bankruptcy (taflis) and post-bankruptcy stages, incorporating key Shariah parameters to ensure adherence to Islamic finance principles. It addresses challenges such as adapting to dynamic financial landscapes and varying interpretations of Shariah principles. Notably, the model recognizes the separate legal personality of Islamic banks and emphasizes transparency, fairness and compliance with religious obligations. In the post-bankruptcy stage, directors are urged to voluntarily settle remaining debts, aligning with ethical and Shariah-compliant standards.

Originality/value

The study contributes to the stability and growth of Shariah-compliant financial systems by extending insolvency principles to Islamic banks, providing a foundation for future research and policymaking specific to this context.

Details

International Journal of Law and Management, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 1754-243X

Keywords

Open Access
Article
Publication date: 18 October 2023

Ivan Soukal, Jan Mačí, Gabriela Trnková, Libuse Svobodova, Martina Hedvičáková, Eva Hamplova, Petra Maresova and Frank Lefley

The primary purpose of this paper is to identify the so-called core authors and their publications according to pre-defined criteria and thereby direct the users to the fastest…

Abstract

Purpose

The primary purpose of this paper is to identify the so-called core authors and their publications according to pre-defined criteria and thereby direct the users to the fastest and easiest way to get a picture of the otherwise pervasive field of bankruptcy prediction models. The authors aim to present state-of-the-art bankruptcy prediction models assembled by the field's core authors and critically examine the approaches and methods adopted.

Design/methodology/approach

The authors conducted a literature search in November 2022 through scientific databases Scopus, ScienceDirect and the Web of Science, focussing on a publication period from 2010 to 2022. The database search query was formulated as “Bankruptcy Prediction” and “Model or Tool”. However, the authors intentionally did not specify any model or tool to make the search non-discriminatory. The authors reviewed over 7,300 articles.

Findings

This paper has addressed the research questions: (1) What are the most important publications of the core authors in terms of the target country, size of the sample, sector of the economy and specialization in SME? (2) What are the most used methods for deriving or adjusting models appearing in the articles of the core authors? (3) To what extent do the core authors include accounting-based variables, non-financial or macroeconomic indicators, in their prediction models? Despite the advantages of new-age methods, based on the information in the articles analyzed, it can be deduced that conventional methods will continue to be beneficial, mainly due to the higher degree of ease of use and the transferability of the derived model.

Research limitations/implications

The authors identify several gaps in the literature which this research does not address but could be the focus of future research.

Practical implications

The authors provide practitioners and academics with an extract from a wide range of studies, available in scientific databases, on bankruptcy prediction models or tools, resulting in a large number of records being reviewed. This research will interest shareholders, corporations, and financial institutions interested in models of financial distress prediction or bankruptcy prediction to help identify troubled firms in the early stages of distress.

Social implications

Bankruptcy is a major concern for society in general, especially in today's economic environment. Therefore, being able to predict possible business failure at an early stage will give an organization time to address the issue and maybe avoid bankruptcy.

Originality/value

To the authors' knowledge, this is the first paper to identify the core authors in the bankruptcy prediction model and methods field. The primary value of the study is the current overview and analysis of the theoretical and practical development of knowledge in this field in the form of the construction of new models using classical or new-age methods. Also, the paper adds value by critically examining existing models and their modifications, including a discussion of the benefits of non-accounting variables usage.

Details

Central European Management Journal, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 2658-0845

Keywords

Article
Publication date: 8 August 2023

Ahmad Ali Jan, Fong-Woon Lai, Syed Quaid Ali Shah, Muhammad Tahir, Rohail Hassan and Muhammad Kashif Shad

Sustainability is essential to the ongoing operations of banks, though it is much less clear how Islamic corporate governance (ICG) promotes economic sustainability (ES) and…

406

Abstract

Purpose

Sustainability is essential to the ongoing operations of banks, though it is much less clear how Islamic corporate governance (ICG) promotes economic sustainability (ES) and thereby prevents bankruptcy. To explore the unexplored, this study aims to examine the efficacy of ICG in preventing bankruptcy and enhancing the ES of Islamic banks operating in Pakistan.

Design/methodology/approach

The current study measures ES through Altman's Z-score to analyze the level of the industry's stability and consequently examines the effect of ICG on the ES of Islamic banks in Pakistan for the post-financial-crises period. Using the country-level data, this study utilized a fixed-effect model and two-stage least squares (2SLS) techniques on balanced panel data spanning from 2009 to 2020 to provide empirical evidence.

Findings

The empirical results unveiled that board size and meetings have a significant positive influence on the ES while managerial ownership demonstrated an unfavorable effect on ES. Interestingly, the insignificant effect of women directors became significant with the inclusion of controlled variables. Overall, the findings indicate that ICG is an efficient tool for promoting ES in Islamic banks and preventing them from the negative effects of emerging crises.

Practical implications

The findings provide concrete insights for policymakers, regulators and other concerned stakeholders to execute a sturdy corporate governance system that not only oversees the economic, social and ethical aspects but also provides measures to alleviate the impacts of potential risks like the COVID-19 pandemic.

Social implications

Examining the role of ICG in alleviating bankruptcy risk is an informative and useful endeavor for all social actors.

Originality/value

To the best of the authors’ knowledge, this study is one of the first efforts to provide evidence-based insights on the role of ICG in preventing bankruptcy and offers a potential research direction for ES.

Details

Management & Sustainability: An Arab Review, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 2752-9819

Keywords

Article
Publication date: 12 February 2024

Anas Ghazalat and Said AlHallaq

This study aims to investigate the effect of accounting conservatism and business strategies as mitigating tools for bankruptcy risk. It determines the association among these…

Abstract

Purpose

This study aims to investigate the effect of accounting conservatism and business strategies as mitigating tools for bankruptcy risk. It determines the association among these factors and provides insights into the effectiveness of accounting discretion and business strategies in decision-making.

Design/methodology/approach

The study uses a sample of 83 nonfinancial listed firms in ASE for the period from 2013 to 2019. Bankruptcy risk is measured using the Altman Z-score (1968). Accounting conservatism is measured using the accrual-based approach, and optimal business strategies are identified through cluster analysis.

Findings

The results indicate that accounting conservatism has a significant negative effect on bankruptcy risk. Increased application of accounting conservatism practices leads to a decrease in the level of bankruptcy risk. However, the type of business strategy adopted by firms does not have a significant impact on bankruptcy risk, suggesting that firms are not effectively implementing their strategies to mitigate this risk.

Research limitations/implications

This study focuses on nonfinancial listed firms in the ASE, limiting the generalizability of the findings to other contexts. The study's findings contribute to the understanding of the role of accounting conservatism in reducing bankruptcy risk but highlight the need for further research on the effectiveness of business strategies in mitigating this risk.

Originality/value

This study lies in understanding of the role of accounting discretion in financial evaluations and emphasizes the importance of accounting conservatism as a tool for mitigating bankruptcy risk. The study's insights provide valuable guidance to practitioners, regulators and researchers in this field.

Details

Journal of Financial Reporting and Accounting, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 1985-2517

Keywords

Article
Publication date: 7 March 2024

Manpreet Kaur, Amit Kumar and Anil Kumar Mittal

In past decades, artificial neural network (ANN) models have revolutionised various stock market operations due to their superior ability to deal with nonlinear data and garnered…

Abstract

Purpose

In past decades, artificial neural network (ANN) models have revolutionised various stock market operations due to their superior ability to deal with nonlinear data and garnered considerable attention from researchers worldwide. The present study aims to synthesize the research field concerning ANN applications in the stock market to a) systematically map the research trends, key contributors, scientific collaborations, and knowledge structure, and b) uncover the challenges and future research areas in the field.

Design/methodology/approach

To provide a comprehensive appraisal of the extant literature, the study adopted the mixed approach of quantitative (bibliometric analysis) and qualitative (intensive review of influential articles) assessment to analyse 1,483 articles published in the Scopus and Web of Science indexed journals during 1992–2022. The bibliographic data was processed and analysed using VOSviewer and R software.

Findings

The results revealed the proliferation of articles since 2018, with China as the dominant country, Wang J as the most prolific author, “Expert Systems with Applications” as the leading journal, “computer science” as the dominant subject area, and “stock price forecasting” as the predominantly explored research theme in the field. Furthermore, “portfolio optimization”, “sentiment analysis”, “algorithmic trading”, and “crisis prediction” are found as recently emerged research areas.

Originality/value

To the best of the authors’ knowledge, the current study is a novel attempt that holistically assesses the existing literature on ANN applications throughout the entire domain of stock market. The main contribution of the current study lies in discussing the challenges along with the viable methodological solutions and providing application area-wise knowledge gaps for future studies.

Details

Benchmarking: An International Journal, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 1463-5771

Keywords

Article
Publication date: 23 August 2022

Emad Sayed and Manal Khalil

This study aims to investigate the impact of cash holding (CH) on bankruptcy (BR) risk. This study also examines the moderating effect of corporate social responsibility (CSR…

Abstract

Purpose

This study aims to investigate the impact of cash holding (CH) on bankruptcy (BR) risk. This study also examines the moderating effect of corporate social responsibility (CSR) practices on this relationship.

Design/methodology/approach

The data were extracted from firms' annual reports. The panel data were used for 68 firms listed at the Egyptian Stock Exchange (EGX) with a total of 340 observations from 2015 to 2019. The research hypotheses were tested using the panel corrected standards errors (PCSE) method and the feasible generalized least squares (FGLS) method.

Findings

The results reveal that (1) CH has a positive effect on the Z-score (decreasing bankruptcy risk) of the Egyptian listed firms. (2) Egyptian firms that practice CSR have a low level of bankruptcy risk. (3) CSR practices in Egyptian listed firms support the positive relationship between CH and Z-score (declining bankruptcy risk).

Research limitations/implications

The limitations of this study include a relatively small sample size. In addition, the analysis doesn't include other measures of bankruptcy risk due to a lack of data.

Practical implications

The findings of this study will help investors and creditors to evaluate and predict the firms' bankruptcy risk. This study highlights the importance of cash holding for firms in emerging economies. Firms may hold cash to support liquidity, overcome financial distress risk, lower the cost of capital, increase future investment opportunities and reduce uncertainty. Additionally, the results would also help the policymakers, regulators at the EGX and Financial Regulatory Authority and stakeholders to realize the importance of cash holding, evaluate the cash liquidity in Egyptian listed firms, predict the firms' financial distress and consider the consequences of the CSR practices in accordance with Egypt's vision 2030.

Originality/value

Consistent with liquidity preference theory and trade-off theory, this study adds evidence to the literature on bankruptcy risk by investigating the effect of cash holding on bankruptcy risk in emerging economies. According to Egypt's vision 2030, the empirical findings in this study extend previous findings by providing strong additional evidence in emerging economies regarding the moderating effect of CSR practices on the association between cash holding and bankruptcy risk. To the best of our knowledge, this study is the first to investigate the relationship between CSR, CH and BR risk in Egypt.

Details

Journal of Economic and Administrative Sciences, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 1026-4116

Keywords

Article
Publication date: 14 March 2024

Arjun J Nair, Sridhar Manohar and Amit Mittal

Amidst unpredictable and turbulent periods, such as the COVID-19 pandemic, service organization’s responses are required to be innovative, adaptable and resilient. The purpose of…

Abstract

Purpose

Amidst unpredictable and turbulent periods, such as the COVID-19 pandemic, service organization’s responses are required to be innovative, adaptable and resilient. The purpose of this study is to explore the utilization of both reconfiguration and transformational strategies as instruments for cultivating resilience and advancing sustainability in service organizations.

Design/methodology/approach

The study examines a proposed resilience model using fuzzy logic. The research also used a semantic differential scale to capture nuanced and intricate attitudes. Finally, to augment the validity of the resilience model, a measurement scale was formulated using business mathematics and expert opinions.

Findings

Although investing in resilience training can help organizations gain control and maintain their operations in times of crisis, it may not directly help service organizations understand the external turmoil, seek available resources or create adaptive remedies. Conversely, high levels of reconfiguration and transformation management vigour empower a service organization’s revolutionary, malleable vision, organizational structure and decision-making processes, welcoming talented and innovative employees to enhance capabilities during crises.

Research limitations/implications

The resilience model bestows a comprehensive understanding of the pertinence of building resilience for service organizations identifying the antecedents that influence the adoption of these strategies and introduces a range of theoretical perspectives that empowers service organizations to conceptualize and plan for building resilience. The research guides service organizations to become more resilient to external shocks and adapt to changing circumstances by diversifying their offerings, optimizing their resources and adopting flexible work arrangements. The study elaborates on the enhancement of resilience, increasing innovation, improving efficiency and enhancing customer satisfaction for service organizations to remain competitive and contribute to positive social and economic outcomes through the adoption of both reconfiguration and transformational strategies.

Practical implications

The study also guides the service organizations to become more resilient to external shocks and adapt to changing circumstances by diversifying their offerings, optimizing their resources and adopting flexible work arrangements. Rapid innovation and business model innovation are essential components, enabling service organizations to foster a culture of innovation and remain competitive. In addition, the adoption can lead to improved financial performance, job creation and economic growth, contributing to positive social and economic impacts.

Social implications

The resilience model bestows a comprehensive understanding of the pertinence of building resilience for service organizations. It identifies the antecedents that influence the adoption of these strategies and introduces a range of theoretical perspectives that empowers service organizations to conceptualize and plan for building resilience. The research also provides a foundation for further investigation into the effectiveness of these strategies and their impact on organizational performance and sustainability. By better preparing service organizations for disruptions and uncertainties, this research triggers ameliorated organizational performance and sustainability.

Originality/value

Within the realm of the service industry, the present investigation has undertaken the development, quantification and scrutiny of both resilience and tenacity. In addition, it has delved into the intricate dynamics surrounding the influencing factors and antecedents that bear upon resilience, elucidating their consequential impact on the operational performance and outlook of service-oriented organizations. The findings derived from this research furnish valuable insights germane to enhancing operational efficacy and surmounting impediments within the sector.

Details

Journal of Services Marketing, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 0887-6045

Keywords

Article
Publication date: 30 August 2023

Mahdi Bastan, Reza Tavakkoli-Moghaddam and Ali Bozorgi-Amiri

Commercial banks face several risks, including credit, liquidity, operational and disruptive risks. In addition to these risks that are challenging for banks to control and…

Abstract

Purpose

Commercial banks face several risks, including credit, liquidity, operational and disruptive risks. In addition to these risks that are challenging for banks to control and manage, crises and disasters can exert substantially more destructive shocks. These shocks can exacerbate internal risks and cause severe damage to the bank's performance, leading banks to bankruptcy and closure. This study aims to facilitate achieving resilient banking policies through a model-based assessment of business continuity management (BCM) policies.

Design/methodology/approach

By applying a system dynamics (SD) methodology, a systemic model that includes a causal structure of the banking business is presented. To build a simulation model, data are collected from a commercial bank in Iran. By presenting the simulation model of the bank's business, the consequences of some given crises on the bank's performance are tested, and the effectiveness of risk and crisis management policies is evaluated. Vensim Personal Learning Edition (PLE) software is used to construct the simulation model.

Findings

Results indicate that the current BCM policies do not show appropriate resilience in the face of various crises. Commercial banks cannot create sustainable value for the banks' shareholders despite the possibility of profitability, as the shareholders lack adequate resilience and soundness. These commercial banks do not have the appropriate resilience for the next pandemic after coronavirus disease 2019 (COVID-19). Moreover, the robustness of the current banking business model is very fragile for the banking run crisis.

Practical implications

A forward-looking view of resilient banking can be obtained by combining liquidity coverage, stable funding, capital adequacy and insights from stress tests. Resilient banking requires a balanced combination of robustness, soundness and profitability.

Originality/value

The present study is a combination of bank business management, risk and resilience management and SD simulation. This approach can analyze and simulate the dynamics of bank resilience. Additionally, present of a decision support system (DSS) to analyze and simulate the outcomes of different crisis management policies and solutions is an innovative approach to developing effective and resilient banking policies.

Details

Kybernetes, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 0368-492X

Keywords

Article
Publication date: 31 October 2023

Kai Zhang, Lingfei Chen and Xinmiao Zhou

Under the trend of global economic integration and the new context of stagflation, frequent fluctuations in international interest rates are exerting far-reaching impacts on the…

Abstract

Purpose

Under the trend of global economic integration and the new context of stagflation, frequent fluctuations in international interest rates are exerting far-reaching impacts on the world economy. In this paper, the transmission mechanism of the impact of fluctuations in international interest rates (specifically, the American interest rate) on the bankruptcy risk in China's pillar industry, the construction industry (which is also sensitive to interest rates), is examined.

Design/methodology/approach

Using an improved contingent claims analysis, the bankruptcy risk of enterprises is calculated in this paper. Additionally, an individual fixed-effects model is developed to investigate the mediating effects of international interest rates on the bankruptcy risk in the Chinese construction industry. The heterogeneity of subindustries in the industrial chain and the impact of China's energy consumption structure are also analysed in this paper.

Findings

The findings show that fluctuations in international interest rates, which affect the bankruptcy risk of China's construction industry, are mainly transmitted through two major pathways, namely, commodity price effects and exchange rate effects. In addition, the authors examine the important impact of China's energy consumption structure on risk transmission and assess the transmission and sharing of risks within the industrial chain.

Originality/value

First, in the research field, the study of international interest rate risk is extended to domestic-oriented industries. Second, in terms of the research content, this paper is focused on China-specific issues, including the significant influence of China's energy consumption structure characteristics and the risk contagion (and risk sharing) as determined by the current development of the Chinese construction industry. Third, in terms of research methods a modified contingent claim analysis approach to bankruptcy risk indicators is adopted for this study, thus overcoming the problems of data frequency, market sentiment and financial data fraud, which are issues that are ignored by most relevant studies.

Details

Engineering, Construction and Architectural Management, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 0969-9988

Keywords

Open Access
Article
Publication date: 16 August 2022

Ibrahim El-Sayed Ebaid

This study aims to examine whether there are differences between financial statements prepared in accordance with International Financial Reporting Standards (IFRS) and financial…

3154

Abstract

Purpose

This study aims to examine whether there are differences between financial statements prepared in accordance with International Financial Reporting Standards (IFRS) and financial statements prepared in accordance with local accounting standards in terms of its ability to present the financial conditions of companies listed on the Saudi Stock Exchange as one of the emerging markets.

Design/methodology/approach

Data on study variables were obtained from the published financial statements of 67 of listed companies in the Saudi Stock Exchange during the period 2014–2019. The study addressed the research hypotheses by using Altman Z-score model. Both the T-test and Wilcoxon rank test were used to investigate the significance of differences between the values of Z-score and the individual variables included in the model in the pre- and post-IFRS mandatory adoption periods.

Findings

The results revealed a decrease in the values of Z-score as well as the values of the individual variables included in the model in the period following the adoption of IFRS than it was before the adoption of IFRS, which indicates the ability of IFRS to show the financial conditions of companies more transparently than local accounting standards. However, the results of the T-test and Wilcoxon test showed that these decreases were not statistically significant.

Research limitations/implications

This study has some limitations, including the small sample size as a result of the small size of the Saudi Stock Exchange, As well as the reliance of this study only on the Altman model with its five variables in assessing financial conditions without examining the impact of other factors that may affect the financial conditions of companies.

Practical implications

Financial conditions of the companies have important implications for multiple parties such as management, government, investors and others as an early warning sign that enables them to take the necessary measures early before the actual bankruptcy occurs and what results in costs.

Originality/value

Although assessing financial conditions of the companies is one of the basic uses of accounting information, this topic has not received sufficient attention as a means to test the benefits of adopting IFRS, especially in emerging markets such as Saudi Stock Exchange. This is the first study to examine the impact of adopting IFRS on the transparency of financial reporting in assessing financial conditions in Saudi Arabia.

Details

PSU Research Review, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 2399-1747

Keywords

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