—Banks that are experiencing financial distress
would also experience distress to influence the stakeholders
about their performance. Thus, in order to gain the
stakeholders’ confidence, these banks tend to execute False
Financial Statements (FFS) in their reporting. With the
absence of the FFS, the users might act in contrast with the
companies’ goal. Literature has established that at any time
Islamic Banks (IBs) have relatively more liquidity and are less
risky when compared to Conventional Banks (CBs). However,
it does not guarantee that IBs will not face a financial distress.
To rectify this situation, this paper will discuss the “financial
distress-detection model” specifically for IBs as an early FFS
—Financial distress, false financial statements,
Islamic Banks, financial criminology.
H. N. Husna is with Faculty Business Management and Globalization,
Limkokwing University of Creative Technology, Inovasi 1-1, Jalan
Teknokrat 1/1, 63000 Cyberjaya, Selangor, Malaysia (email:
R. A. Rahman is with Accounting Research Institute, Universiti
Teknologi MARA, Shah Alam 40450, Selangor, Malaysia (email:
Cite:H. Nurul Husna and R. Abdul Rahman, "Financial Distress–Detection Model for Islamic Banks," International Journal of Trade, Economics and Finance vol.3, no.3, pp. 158-163, 2012.