Models of Bankruptcy Prediction and Accounting Principles for Banks

Abstract

The paper concerns the current and important issue concerning the bankruptcy prediction of banks. During the recent financial crisis, many European and American banks declared bankruptcy, and many other banks showed worse financial results. Hence, the intense research on methods and tools for reducing the risk of bankruptcy of such financial institutions seems to be important. Clear regulations and requirements of the legislative and supervisory bodies regarding accounting principles and financial reporting of banks are equally important. The authors found that the variety and availability of different models for predicting bankruptcy of banks, as well as the transparency of dedicated accounting rules for banks, affect the stability of the banking sector.