Search results

The main purpose of this study is to evaluate the probability of default and examine the relationship between default risk and financial performance, with dynamic panel moderation of firm size.

This study utilizes a total of 1,500 firm-year observations from 2013 to 2018 using dynamic panel data approach of generalized method of moments to test the relationship between default risk and financial performance with the moderation effect of the firm size.

This study establishes the findings that default risk significantly impacts the financial performance. The relationship between distance-to-default (DD) and financial performance is positive, which means the relationship of the independent and dependent variable is inverse. Moreover, this study finds that the firm size is a significant positive moderator between DD and financial performance.

This study provides new and useful insight into the literature on the relationship between default risk and financial performance. The results of this study provide investors and businesses related to nonfinancial firms in the Pakistan Stock Exchange (PSX) with significant default risk's impact on performance. This study finds, on average, the default probability in KSE ALL indexed companies is 6.12%.

The evidence of the default risk and financial performance on samples of nonfinancial firms has been minimal; mainly, it has been limited to the banking sector. Moreover, the existing studies have only catered the direct effect of only. This study fills that gap and evaluates this relationship in nonfinancial firms. This study also helps in the evaluation of Merton model's performance in the nonfinancial firms.

The scope of this research is to investigate performing loan efficiency for fifty European banks during the period 2008–2017.

The study is structured as a two-stage analysis of performing loan efficiency and its driving factors. In the first stage of the proposed methodology “Data Envelopment Analysis” is used to estimate performing loan efficiency for each bank included in the sample. A bootstrap statistical procedure enhances the findings. In the second stage, the impact of other factors on the efficiency scores of loan performance using tobit regression is investigated.

The results are consistent with the findings of the individual banks' financial analyses. According to the findings of DEA implementation, the evaluated banks may enhance their cost efficiency by 39% on average. In addition, the results indicate that loan efficiency performance improves after 2015, coinciding with the business cycle's upward trend. The tobit regression is employed in the second stage to examine the influence of bank-related and macroeconomic factors on banks' loan management efficiency. According to the findings of the tobit regression, three factors, namely the capital adequacy ratio, GDP per capita and managerial inefficiency, have a substantial influence on performing loan efficiency.

This research investigates the effectiveness of European economic policy in protecting the European banking system from the consequences of the sovereign debt crisis in several euro area members. The results highlight the distance of the Eurozone from the level of the ‘optimal currency area’.