Abstract

<p class="MsoBodyText" style="text-align: justify; margin: 0in 34.2pt 0pt 0.5in; mso-pagination: none;"><span style="font-size: 10pt;" lang="EN-AU"><span style="font-family: Times New Roman;">Bank failure prediction remains an important economic issue.<span style="mso-spacerun: yes;">  </span>Although prior research investigates bank failure prediction, the opportunity to improve predictions exists.<span style="mso-spacerun: yes;">  </span>The purpose of this present study is to investigate the possibility of improving prediction of bank failure by including loan default variables and regional variation in prediction of bank failure. The results of statistical analysis indicate loan default measures contain information content both in their own right and also incrementally above that of traditional CAMEL measures.<span style="mso-spacerun: yes;">  </span>Furthermore, statistical analysis utilizing logit regression shows the superiority of bank failure prediction models that include consideration of geographic region.<span style="mso-spacerun: yes;">  </span></span></span></p>

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