Using the logistic regression to predict the banking stumble Analytic study on sample of UAE banks
Abstract
The research aims to reach to the best set of the financial ratios which can be used to predict the banks stumble and the distinction between the stumbling and not stumbling banks in order to uncover the banks conditions in an early time which give the banks administration and the observation units a chance to get involved and do the correction procedures on time. The statistical method was used to analyze the logistic regression to interpret the relationship between group of variables; the apply the gradual-choice way (Stepwise) by which the models can be generated and choosing the best model among them according to the financial indicators which could be applied to distinct among the stumbling and not stumbling banks. The category related to the banks (stumbling and not stumbling) showed that the sum of the not stumbling banks are (6) and the stumbling banks are (9) among the total of (15) banks during the research period. The category depended on the financial ratios after comparing them with the average of banks (the sample). After doing the logistic regression analysis, it clarified that the most ratios affect the UAE banks are (X5: the rate of the net stumbling loans to the total of the loans, X9: the rate of liquid assets to the Short-term liabilities) described as a significant.
