Financial Distress of Multi-Finance Companies in Emerging Markets

Dharma Satriadi; Hermanto  Siregar; Adler Haymans  Manurung; Nimmi  Zulbainarni

doi:10.23887/ijssb.v8i4.86349

Authors

Dharma Satriadi Doctoral Student, Business School, Institut Pertanian Bogor (IPB), Indonesia
Hermanto Siregar Professor of Economics, School of Business, Institut Pertanian Bogor (IPB), Indonesia
Adler Haymans Manurung Professor of Banking and Finance, University of Bhayangkara Jakarta Raya, Indonesia
Nimmi Zulbainarni Institut Pertanian Bogor (IPB), Indonesia

DOI:

https://doi.org/10.23887/ijssb.v8i4.86349

Keywords:

Financial Distress, Multifinance Companies, Merton Model, Internal and External Variables of the Company

Abstract

Financial distress is when the company cannot pay what has been agreed upon when it is due. This paper discusses financial difficulties in multi-finance companies from 2010 to 2023. Forecasting financial difficulties uses the Merton Model method, adapted from the Black-Scholes Model for option prices. The method used to predict financial difficulties for multi-finance companies uses the Merton Method, as described previously, which is an adaptation of the Black-Scholes method. His research found that multi-finance companies still have negative interest margins. Increasing the credit disbursed also needs to receive attention from company management. The company's marketing costs also appear minor and can be imitated by other institutions. The probability of financial distress for multi-finance companies is very high and cannot be separated from the business characteristics of multi-finance companies. Multifinance companies still have negative interest margins. Increasing the credit disbursed also needs to receive attention from company management; the company's marketing costs also appear minor and can be imitated by other institutions; the probability of financial distress for multi-finance companies is very high and cannot be separated from the business characteristics of multi-finance companies.

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