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Employing a unique data set for the period 2000–2010, this paper examines the impact of formal enforcement actions targeting the core of the banks’ financial safety and soundness in terms of bank capital, risk, and performance. We find that, on average, these actions reduce both the risk-weighted assets and the nonperforming loans ratios of punished banks, but there is no increase in the level of regulatory capital. These effects are less powerful during the postcrisis period, suggesting that banks’ scope to improve their safety and soundness condition in crisis periods is much more limited. We also find, albeit with some limitations, that the timing of formal enforcement actions is important: the more the actions are deferred relative to the continuous deterioration of the banks’ financial condition, the more limited their impact on the risk-based capital ratio, while actions taken earlier help banks to improve their financial soundness. Data, as supplemental material, are available at http://dx.doi.org/10.1287/mnsc.2015.2343 . This paper was accepted by Wei Jiang, finance .

In efforts to better understand the financial condition of state and local government and to be better prepared for fiscal exigencies during crises, practitioners and academics alike strive to find a better way to assess governmental financial condition. Several models have been developed to evaluate state and local government over the past several decades, with significant limitations. We propose a more comprehensive framework to evaluate the fiscal health of state government based on these models. Further, we utilize the data from the annual comprehensive financial reports of state governments in the U.S. for 2003 to 2018 to demonstrate the applicability and usefulness of the modified model. The results are useful for state administrators and financial managers in their efforts to assess financial condition and fiscal administration and add to the literature on state fiscal health.

PurposeThis paper investigates how the gap between the host country's actual and optimal financial conditions affects foreign direct investment (FDI) inflows through evidence from China.Design/methodology/approachThe authors first employ principal component analysis (PCA) to measure FDI target countries' actual financial conditions and use 30 OECD countries as a reference group to assess the optimal financial condition. The authors then estimate a two-way fixed effect model with panel data of China's outward FDI in 64 countries for the period 2003–2017 to get the regression results. The authors' results overcome endogeneity and are robust.FindingsResults show that (1) the gaps between host countries' actual and optimal financial conditions positively affect FDI inflows from China; (2) there is a heterogeneous effect between low-income and high-income countries. The gaps for high-income countries significantly increase FDI inflows from China, while the gaps are not significant for low-income countries.Research limitations/implicationsThe authors examine how the gap affects FDI inflows from China. An increase of 1% in the target country's gap promotes a 6.3% increase in FDI inflows. However, the authors do not explore what mechanisms are key to these results. The authors will explore these questions in the future.Originality/valueThis paper complements the influence factors of FDI and enriches theories of FDI. The gap between actual and optimal financial conditions plays an essential role in FDI flows across countries for policymakers.

The article explores the theoretical aspects of a comprehensive enterprise financial condition assessment and the possibilities of its practical application and substantiates the sequence of stages of calculation and analytical procedures that can provide a stable foundation for the economic development of an enterprise. The purpose of the article is to improve the methodology of a comprehensive assessment of the financial condition of an enterprise and its practical aspects.The term \"financial condition of an enterprise\" is considered in the context of the need to assess it in order to counteract financial problems and prevent crisis phenomena. The article proposes the use of a system of key performance indicators, proves the importance of an integrated approach to assessing the financial condition of an enterprise and describes the key requirements for choosing the optimal system of indicators.The study has allowed the formulation of a generalized approach to a comprehensive assessment of the financial condition of an enterprise. The article proposes the introduction and use of an integral indicator, defines criteria of assessment of results and equality, observance of which by an enterprise is able to maintain its condition at the proper level and to provide a foundation for expanded reproduction, which, as a result of efficient functioning of economic entities, will contribute to the development of the economy.

This study aims to obtain empirical evidence related to the effect of the variables such as local government characteristics, infrastructure, and local government financial condition to the financial distress of local governments in Indonesia. Population of this study is all local government that issue the financial statements audited by the Supreme Audit Agency (Badan Pemeriksa Keuangan Repulik Indonesia-BPK RI) in the period 2007 to 2009. The method of sampling is purposive sampling method producing 152 observations. Method of analysis is binary logistic regression. The results show that size (SZ), total program cost for assets (RPCTA), carrying value (CV), ratio of cash quickly (CQR), performance of government wealth (PERF), return on equity (ROE), profit margin (PM), and current liabilities (CL) significantly associate with probability of financial distress of local government. It implies that information presented in the financial statements of local governments in Indonesia has a predictive value, and, therefore is relevant tobe used in decision making.

Purpose: The aim of this study was to examine the local financial condition of Enrekang Regency for the 2015-2019 fiscal year as an overview of the ability and success of local governments in managing their own local finances.   Theoretical framework: The Regional financial condition is the ability of a local government to fulfill its obligations to anticipate unexpected events, as well as to execute their financial rights effectively and efficiently (Ritonga, 2014). The measurements carried out in this study are based on the dimensions of condition measurement proposed by Ritonga 2014, namely short-term solvency, budget solvency, long-term solvency, financial flexibility, financial independence, and service level solvency.   Design/methodology/approach:  The method used in this research is the descriptive method with a quantitative approach. The data used is secondary data sourced from the Local Government Financial Report Examination Results of Enrekang Regency for the 2015-2019 fiscal year, obtained from the Information and Documentation Management Officer.   Findings:  The results of this satudy are the financial management in Enrekang Regency is quite good so as to produce a fairly good financial condition as well. Enrekang Regency has a good financial condition in terms of short-term dimensions, budget solvency, financial flexibility and service level solvency. Meanwhile, the regional financial condition of Enrekang Regency is still not good in terms of regional financial independence due to the low local revenue. The regional government still relies heavily on funding sources from outside or relies on transfer funds from the central government.   Research, Practical & Social implications: The results of this study are useful as a source of information in making decisions for the local government of Enrekang district and related parties, especially in making policies related to governance, especially in effective, efficient and economical financial management.   Originality/value:  The value of this research is very useful for the local government as a guide in assessing the condition of government financial health.

One of the components of a highly effective management system is operational controlling at the enterprise. At the same time, the most important indicator characterising the efficiency of the functioning of the enterprise and, accordingly, subject to controlling is its solvency, which affects the level of competitiveness of the enterprise and the efficiency of its adaptation to the changing conditions of the market environment. In this regard, the purpose of the research is to modernize the procedure of financial controlling based on the development of an integral model for determining and analysing the transformational solvency index. The article forms a universal model of financial condition assessment, in which all threshold values of the coefficients, calculated according to existing methods of financial stability assessment, are reduced to one scale and the accumulated impact of indicator values for previous periods of economic activity is taken into account.On the basis of the correlation analysis, the nature and strength of the dependence of the transformational solvency index on the factors influencing its formation and causing tendentious trends in the dynamics of its change during a certain period are determined.

Identifying the characteristics of Indonesian local governments that disclose financial statements looks relevant in order to find out the reasons for local governments in making policies to disclose financial statements. This study aims to examine whether financial condition, financial independence and political competition have an effect on the disclosure of financial statements in local governments, particularly districts/cities in Sumatra, Indonesia. A sample of 151 districts and cities on the Indonesian island of Sumatra were used in this quantitative analysis. The use of cluster sampling due to the implementation of accrual accounting based on the government regulation No. 71 of 2010 is applied in all districts/cities in Sumatra and has the same characteristics. The data analysis technique used in this study is a multiple linear regression with the SPSS test tool. The results reveal that factors influencing the financial statements disclosure is influenced by financial conditions (β = 0.095; p < 0.05), financial independence (β = 0.069; p < 0.05), and political competition (β = 0.038; p < 0.05). Overall, the results show a strong conclusion regarding the factors that affect the financial statements of the Indonesian government. The findings of this investigation can be a useful consideration for local governments in improving the quality of their external communications and improving public governance.

The paper uses monthly data on tourism related factors from April 2005–June 2016 for Taiwan that applies factor analysis and Chang’s (2015) novel approach for constructing a tourism financial indicator, namely the Tourism Financial Conditions Index (TFCI). The TFCI is an adaptation and extension of the widely-used Monetary Conditions Index (MCI) and Financial Conditions Index (FCI) to tourism stock data. However, the method of calculation of the TFCI is different from existing methods of constructing the MCI and FCI in that the weights are estimated empirically. The empirical findings show that TFCI is statistically significant using the estimated conditional mean of the tourism stock index returns (RTS). Granger Causality tests show that TFCI shows strong feedback on RTS. An interesting insight is that the empirical results show a significant negative correlation between F1_visitors (Foreign Visitor Arrivals) and RTS, implying that tourism authorities might promote travel by the “rich”, and not only on inbound visitor growth. The use of market returns on the tourism stock sub-index as the sole indicator of the tourism sector, as compared with the general activity of economic variables on tourism stocks, is shown to provide an exaggerated and excessively volatile explanation of tourism financial conditions.

This study explores the role of rating in the financial risk management process within automobile manufacturing organizations. It examines the methodological approaches employed by automakers to evaluate financial risks, with a particular focus on liquidity, solvency, financial stability, business activity, and market risks. Building on existing techniques, the research introduces an interval-based risk assessment methodology that differentiates industry sectors and applies it to 22 leading automakers listed on international stock exchanges by capitalization. The study seeks to identify high-risk zones across the sector in relation to key components of financial condition, offering decision-makers a comprehensive view of industry-wide vulnerabilities. The scientific novelty lies in adopting a rating-based approach that integrates a detailed assessment of financial risks across the automotive industry, moving beyond traditional company-specific analyses. While operational risks are often addressed in terms of supply chain disruptions or production delays, this study emphasizes their financial consequences. Production stoppages, inefficiencies, safety incidents, and unexpected shocks such as natural disasters, labor strikes, or equipment breakdowns can significantly raise costs and erode revenues. By examining these interconnections, the study highlights the importance of contingency planning and supply chain diversification as tools for mitigating the financial effects of operational disruptions. Overall, the research provides a holistic framework for assessing financial and operational risks, offering valuable insights for investors, managers, and policymakers seeking to strengthen risk management practices in the automotive sector.