Financial ratios and non-payment risk factor with panel probit model: a case of Turkey

ABSTRACT

This study is based on the data of the companies traded on the BIST (Borsa İstanbul Stock Exchange) stock exchange with the panel probit method to obtain the risk of empirical non-payment risk with scores models. Non-Payment risk of companies will be used and compared with the Z-Score and O-Score models. In this study, the financial ratios were formed using BIST-100 data between the years January 2013 and December 2017. In the calculation of the ratios, some ratios were excluded from the analysis due to lack of data and explanation problem. The fact that the ratios do not grow is assumed to reduce the risk of non-repayment, thus causing some firms to generate a large positive number in the ratio of negative net profit and very small negative equity in their ratios and this leads to misinterpretation of the probability of non-payment. Therefore, some ratios have not been included in the analysis to eliminate this problem.

KEYWORDS:

• Non-payment risk
• panel probit scoring
• Tobin’s Q
• Altman Z-scoring

JEL CLASSIFICATION:

• C33
• C23
• B23
• A19

Disclosure statement

No potential conflict of interest was reported by the author.