Modelling Default Risk of Credit Institutions because of their Doubtful Transactions

Questionable operations in the banking sector are not given much attention from researchers when these operations are one of the main reasons for revoking banking licenses. The purpose of this study is to identify factors that allow us to assume that a likely Bank conducts questionable operations and has a risk of losing licenses because of this. This study is based on a sample of 300 Russian banks for the period from 2014 to 2019. The results of this work has been proven to negatively influence the net liquidity position on the revocation of the banking license due to questionable transactions, refuted the positive impact of corporate securities and proved the possibility of using the IBC and equity capital to balance sheet total as a composite indicator, revealing the non-market character of the Bank's conduct. The applied nature of the work confirms the fact that now the business only has tools to assess the possibility of default for financial reasons. This model can be used together with financial indicators for a combined assessment of commercial counterparties in the banking sector.