Details
| Title | Analysis of Financial Statements of Non-operating Rural Banks in the Philippines Using 2 Financial Ratios |
| Author | Deiparine, Zyrish Rhod B.; Arquiza, Marie Karen J.; Catipay, Carrah Mae L.; Friolo, Jonna Jahya D.; Gantuangco, Tiffany Shane S. |
| Department | Accounting and Finance |
| Year | 2023 |
| Abstract | The existence of rural banks plays a vital role in promoting inclusive development in the Philippines. This study aims to analyze the financial statements of the five (5) non-operating Philippine rural banks in their last four (4) years of operation and the possible factors or variables commonly present in each financial statement that signaled the bank closure. The researchers utilized the principal component analysis (PCA) approach, which revealed a result with the first eigenvector is 45.50%. This result means that the Bank Closure Index (BCI) is accurate 45.50% of the time. Furthermore, this study found that the capital/asset ratio is the 15 most influential ratio toward bank closure, with a factor loading of 0.379. Banks must maintain sufficient capital to reduce the likelihood of closure due to risk factors. |
| Keywords | Non-operating rural banks, bank failure, financial ratios, capital adequacy, asset quality, management quality, earning ability, liquidity. |
| DOI | usjr_000051 |
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