Pabna University of Science and Technology

Abstract

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Purpose: The purpose of this research is to predict the financial distress risk of commercial banks in Bangladesh for the pre COVID-19 periods and during COVID-19 timeframes. This study also aims to analyses the effect of COVID-19 on the financial distress risk of commercial banks in Bangladesh. Methodology: This research uses Altman's Z Score Model (1995) to predict the financial distress risks of 19 publicly listed private commercial banks in Bangladesh over an 8-year period, from 2014 to 2021. The COVID-19 epidemic’s main effect on those risks has been evaluated using a regression equation. SPSS has been used to analyze the data. Findings: The results show that the COVID-19 epidemic has significantly impacted all sampled commercial banks, placing them in the “Distress” zone, and the COVID-19 pandemic has greatly raised the risks of financial distress. Practical Implications: The findings of this study will help bank executives, depositors, businessmen and policy makers to figure out financial distress of commercial banks during COVID-19 pandemic and be able to take preventive measures for any kind of upcoming uncertainty like COVID-19 Originality: The effect of COVID-19 on the risks of financial crisis that commercial banks in developing countries like Bangladesh confront, however, has not received as much attention yet. Research Limitations: The likelihood of financial difficulty is linked to numerous internal and external factors in addition to the COVID-19 pandemic. The relationship between the financial distress risks of private commercial banks and macroeconomic factors, global economic crises, and corporate governance compliance can be explored in more detail.