Abstract
The acceleration in the number of US bank failures during recent years provides valuable data for developing bank failure prediction models. A probit models which incorporates various bank structure variables as well as traditional financial ratios is used to explain bank failures during the 1982—3 period. The empirical findings suggest that important information regarding a bank's likelihood of failure is contained in its balance sheet and income accounting data. It is also found that banks which affiliate with holding companies or are larger in size have a significantly lower probability of failure. This suggests that states which impose unit-banking rules or block holding company formation may be adding to failure risks.
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