Financial Distress Prediction of Cooperative Financial Institutions—Evidence for Taiwan Credit Unions

In response to relatively little evidence on the determinants of financial distress in cooperative institutions (e.g., Credit Unions), this paper proposes a indicator Merton Distance default (Merton DD), which was constructed with z-score, possessed improved predictive capability, but reducing equity volatility. This model possesses advantages both hazard and modified DD model, could timely reflect market volatility predict when would occur. As demonstration, we applied forecast credit unions Taiwan. The results can provide more information researchers.