ORCID Profile
0000-0002-0655-0674
Current Organisation
Al-Ahliyya Amman University
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Publisher: Emerald
Date: 07-04-2023
DOI: 10.1108/JMLC-01-2023-0013
Abstract: The prevention of fraudulent activities, particularly within a financial context, is of paramount significance in all spheres, as it not only impacts the sustainability of corporate entities but also has the potential to have a broader economy-wide impact. This paper aims to focus on dual implications associated with financial distress, the first being associated with the temptation to launder funds due to financial distress, and the second being the potential for illicit activities, such as fraud, money laundering or terror financing, to give rise to financial distress. The paper examines the literature on financial distress and uses theories of financial crime to establish a link between financial distress and financial crime. In recent years, there has been a surge in corporate financial distress, particularly in the aftermath of concurrent crises such as the COVID-19 pandemic and the Russia–Ukraine war. Through a comprehensive examination of literature pertaining to financial distress and financial crime, this study identifies a proclivity towards fraudulent conduct arising from instances of financial distress. Moreover, the engagement in such illicit activities subsequently exacerbates the financial distress. An analysis of the relationship between financial crime and financial distress reveals the existence of a vicious cycle between the two. The results of this study have the potential to advance understanding of the relationship between financial distress and financial crime, which has been previously underexplored.
Publisher: Elsevier BV
Date: 06-2023
Publisher: Informing Science Institute
Date: 2023
DOI: 10.28945/5112
Abstract: Aim/Purpose: This paper aims to empirically quantify the financial distress caused by the COVID-19 pandemic on companies listed on Amman Stock Exchange (ASE). The paper also aims to identify the most important predictors of financial distress pre- and mid-pandemic. Background: The COVID-19 pandemic has had a huge toll, not only on human lives but also on many businesses. This provided the impetus to assess the impact of the pandemic on the financial status of Jordanian companies. Methodology: The initial s le comprised 165 companies, which was cleansed and reduced to 84 companies as per data availability. Financial data pertaining to the 84 companies were collected over a two-year period, 2019 and 2020, to empirically quantify the impact of the pandemic on companies in the dataset. Two approaches were employed. The first approach involved using Multiple Discriminant Analysis (MDA) based on Altman’s (1968) model to obtain the Z-score of each company over the investigation period. The second approach involved developing models using Artificial Neural Networks (ANNs) with 15 standard financial ratios to find out the most important variables in predicting financial distress and create an accurate Financial Distress Prediction (FDP) model. Contribution: This research contributes by providing a better understanding of how financial distress predictors perform during dynamic and risky times. The research confirmed that in spite of the negative impact of COVID-19 on the financial health of companies, the main predictors of financial distress remained relatively steadfast. This indicates that standard financial distress predictors can be regarded as being impervious to extraneous financial and/or health calamities. Findings: Results using MDA indicated that more than 63% of companies in the dataset have a lower Z-score in 2020 when compared to 2019. There was also an 8% increase in distressed companies in 2020, and around 6% of companies came to be no longer healthy. As for the models built using ANNs, results show that the most important variable in predicting financial distress is the Return on Capital. The predictive accuracy for the 2019 and 2020 models measured using the area under the Receiver Operating Characteristic (ROC) graph was 87.5% and 97.6%, respectively. Recommendations for Practitioners: Decision makers and top management are encouraged to focus on the identified highly liquid ratios to make thoughtful decisions and initiate preemptive actions to avoid organizational failure. Recommendation for Researchers: This research can be considered a stepping stone to investigating the impact of COVID-19 on the financial status of companies. Researchers are recommended to replicate the methods used in this research across various business sectors to understand the financial dynamics of companies during uncertain times. Impact on Society: Stakeholders in Jordanian-listed companies should concentrate on the list of most important predictors of financial distress as presented in this study. Future Research: Future research may focus on expanding the scope of this study by including other geographical locations to check for the generalisability of the results. Future research may also include post-COVID-19 data to check for changes in results.
Publisher: Emerald
Date: 27-04-2018
Abstract: Financial distress is a socially and economically important problem that affects companies the world over. Having the power to better understand – and hence aid businesses from failing, has the potential to save not only the company, but also potentially prevent economies from sustained downturn. Although Islamic banks constitute a fraction of total banking assets, their importance have been substantially increasing, as their asset growth rate has surpassed that of conventional banks in recent years. The paper aims to discuss these issues. This paper uses a data set comprising 101 international publicly listed Islamic banks to work on advancing financial distress prediction (FDP) by utilising cutting-edge stochastic models, namely decision trees, stochastic gradient boosting and random forests. The most important variables pertaining to forecasting corporate failure are determined from an initial set of 18 variables. The results indicate that the “Working Capital/Total Assets” ratio is the most crucial variable relating to forecasting financial distress using both the traditional “Altman Z-Score” and the “Altman Z-Score for Service Firms” methods. However, using the “Standardised Profits” method, the “Return on Revenue” ratio was found to be the most important variable. This provides empirical evidence to support the recommendations made by Basel Accords for assessing a bank’s capital risks, specifically in relation to the application to Islamic banking. These findings provide a valuable addition to the limited literature surrounding Islamic banking in general, and FDP pertaining to Islamic banking in particular, by showcasing the most pertinent variables in forecasting financial distress so that appropriate proactive actions can be taken.
Publisher: MDPI AG
Date: 16-05-2018
DOI: 10.3390/RISKS6020055
Publisher: Emerald
Date: 14-04-2023
DOI: 10.1108/JMLC-02-2023-0033
Abstract: This paper aims to outline how certain lessons from ethical systems can be relevant and applicable to tackling unethical behavior, including financial crime, within the finance profession. This paper adopts a pragmatic perspective while acknowledging that there is a myriad of reasons managers act unethically, including the reality that many do so knowingly and deliberately. The matter is further complicated by human nature, given an in idual’s behavior (ethical or unethical) is not easily discernable from their psychological, sociological, theological or cultural attributes. Although such systems may not solve the problem of corrupt behavior, research suggests that industry professionals can learn to act in a more responsible and ethical manner. Given the wounded reputation of the financial sector, owing to their role in committing financial crimes such as money laundering, advances in ethical conduct would elevate both the effectiveness of the sector, as well as its reputation. It is impractical to think we can completely resolve the problem of unethical behavior. Improvement, however, seems possible through promoting virtuous character traits and ethical behavior in in iduals and organizations. Virtue ethics can play a significant role in combating financial crime and supporting anti-money laundering initiatives.
No related grants have been discovered for Khaled Halteh.