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ИД «Финансы и кредит»






Digest Finance

Analyzing the accuracy of bank reliability assessment based on official reporting

Vol. 28, Iss. 3, SEPTEMBER 2023

PDF  Article PDF Version

Received: 4 December 2019

Received in revised form: 27 December 2019

Accepted: 21 January 2020

Available online: 28 September 2023

Subject Heading: Banking

JEL Classification: G21, G24, G28, G33

Pages: 301–321


Ol'ga I. RAZUMOVA Plekhanov Russian University of Economics (PRUE), Moscow, Russian Federation


Subject. The article considers ratings of banks' reliability.
Objectives. The aim is to evaluate the accuracy of existing methodology for bank reliability assessment based on official reporting, to identify patterns between indicators and factors that can affect the financial sustainability of a bank.
Methods. The study draws on the comparative analysis of key indicators of bank's financial statements one year prior to the introduction of provisional administration, and evaluates the results of existing methods for analyzing the financial standing of banks.
Results. The findings show that those methods that use only official reporting to assess the reliability of banks are not sufficient for short-term forecasting of financial stability. Ratings of the majority of agencies that rest on official reporting have a high percentage of erroneous results, therefore, rating agencies are not able to predict the regulator's decisions regarding a credit institution.
Conclusions. Currently, there are no universal methods to determine reliability, which would provide a correct forecast of deteriorated financial position of the bank. It is important to use a systems approach, where financial reporting is not a key component.

Keywords: bank, reliability, capital adequacy, provisional administration, statutory reporting


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