RBI Working Paper Series No. 10: Modelling Corporate Sector Distress in India- (Reserve Bank of India) (26 Dec 2016)
MANU/RPRL/0334/2016
Banking
The Reserve Bank of India today placed on its website a Working Paper titled "Modelling Corporate Sector Distress in India" by Manjusha Senapati and Saptarshi Ghosal under the Reserve Bank of India Working Paper Series. The paper attempts to formulate a model to predict corporate financial distress of non-government non-financial public limited companies and estimates distressed bank debt for the sample companies covering the period 2006-07 to 2013-14. The model estimates probability of a company being financially distressed in the following year using the multivariate logistic regression based on three financial ratios, namely, long term liabilities to total assets, operating profits to total liabilities, and current assets to current liabilities. The model was tested for some stressed industries/companies and was found to capture the underlying distress. Distressed bank debt for the sample companies was found to be increasing since 2011-12. The Reserve Bank of India introduced the RBI Working Papers series in March 2011. These papers present research in progress of the staff members of the Reserve Bank and are disseminated to elicit comments and further debate. The views expressed in these papers are those of authors and not of the Reserve Bank of India. Comments and observations may kindly be forwarded to authors. Citation and use of such papers should take into account its provisional character.
Tags : CORPORATE SECTOR DISTRESS WORKING PAPER
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