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THE IMPLICATIONS OF DISTRESS PREDICTION MODELS FOR CORPORATE LENDING
Author(s) -
Whittred Greg,
Zimmer Ian
Publication year - 1985
Publication title -
accounting and finance
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.645
H-Index - 49
eISSN - 1467-629X
pISSN - 0810-5391
DOI - 10.1111/j.1467-629x.1985.tb00064.x
Subject(s) - bankruptcy , financial distress , judgement , loan , bankruptcy prediction , actuarial science , distress , going concern , predictive modelling , psychology , econometrics , business , economics , accounting , finance , computer science , financial system , clinical psychology , machine learning , political science , audit , law , auditor's report
Three literatures on financial distress prediction are reviewed and evaluated in terms of their usefulness in credit analysis. These are (1) bankruptcy prediction models initiated by Altman, (2) behavioural studies of the ability of loan officers and others to make accurate predictions of bankruptcy and (3) attempts to simulate loan officers' judgements. It is concluded that techniques based on judgement simulation are likely to be the most effective decision aids.