Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/212218 
Year of Publication: 
2012
Series/Report no.: 
Bank of Finland Research Discussion Papers No. 15/2012
Publisher: 
Bank of Finland, Helsinki
Abstract: 
We aim to assess how accurately accounting and stock market indicators predict rating changes for Asian banks. We conduct a stepwise process to determine the optimal set of early indicators by tracing upgrades and downgrades from rating agencies, as well as other relevant factors. Our results indicate that both accounting and market indicators are useful leading indicators but are more effective in predicting upgrades than downgrades, especially for large banks. Moreover, early indicators are only significant in predicting rating changes for banks that are more focused on traditional banking activities such as deposit and loan activities. Finally, a higher reliance of banks on subordinated debt is associated with better accuracy of early indicators.
Subjects: 
Bank Failure
Bank Risk
Ratings
Emerging Market
JEL: 
G21
G28
Persistent Identifier of the first edition: 
ISBN: 
978-952-462-800-6
Document Type: 
Working Paper

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