Signaling theory vis a vis bankruptcy prediction model in islamic bank industry in Indonesia

Abstract

This study aims to analyze the difference in the results of bankruptcy predictions in Islamic banking in Indonesia with the research period of 2018-2022. This study uses a quantitative approach, with a sample number of 11 Islamic banking companies. The bankruptcy prediction results compared in this study include Zmijewski, Grover, and Altman Z-Score Modified. Furthermore, the results of this study show that the three calculation models have differences in predicting the bankruptcy of Islamic banks. (1) The Zmijewski model analyzes five samples to be on the criteria of potentially bankrupt and six on the criteria of safe or healthy. (2) Grover's model analyzed 11 samples on safe or healthy criteria. (3) The Altman z-score Model Modification analyzes five samples on the safe or healthy criteria, five on the gray area criteria, and one on the potentially bankrupt criteria. The implication of this study is as a reference and information to stakeholders who focus on measuring the performance of Islamic companies and banks specifically. In addition, the novelty of this research is to compare the results of bankruptcy prediction models in Islamic banks that have never been done in the period 2018 to 2022.

Keywords

• bankruptcy prediction
• sharia bank
• zmijewski model
• grover model
• altman z-score model modified
• signal theory