Volume : 4, Issue : 2, February - 2015

CORPORATE BANKRUPTCYPREDICTIONS: EVIDENCE FROM SELECTED BANKS IN NIGERIA

Egbunike, Patrick Amaechi, Ibeanuka, Chidimma Blessing

Abstract :

<p>The study is set to examine corporate bankruptcy threats among selected banks in Nigeria. Data were collected from the annual reports of banks 2007&ndash;2011 available in 2010&ndash;2011 facts book of Nigerian Stock Exchange. In addition to descriptive statistics, t&ndash;test difference between mean, analysis of variance (ANOVA) test and multi&ndash;discriminant model were used in analyzing the collected data. The study identified five financial ratios &ndash; working capital/Total assets, retained earnings/total asset, EBIT/total asset, Equity/Total Asset, Gross earning/total asset that could predict financial distress. Predicated on this, the study recommended that working capital, retained earnings, and governance framework among others should be closely monitored and recommended that there should be adequate supervision from the Central Bank of Nigeria and National Deposit Insurance Commission to ensure compliance and effectiveness of the banking sector in Nigeria and Banks should make use of financial ratio in the assessment of their financial performance.</p>