Researcher ORCID Identifier

0009-0009-0714-844X

Graduation Year

2024

Date of Submission

4-2024

Document Type

Campus Only Senior Thesis

Degree Name

Bachelor of Arts

Department

Economics

Reader 1

George Batta

Rights Information

© 2024 Matthew Ho

Abstract

In the wake of the unprecedented collapse of one of China's largest real estate developers, China Evergrande, questions have emerged regarding the sustainability, financial integrity, and structural soundness of these major conglomerates. Did financial professionals misjudge the magnitude of China’s ongoing property crisis, or did they choose to ignore the warning signs? Economic models such as the Altman Z score have been created to predict impending financial distress for individual firms. However, current published literature has not yet presented any instances where the Altman Z-score, or other financial distress prediction models, have been utilized as proxies for sector wide health. This paper finds that the Altman China Z score model could predict up to a 1% variation in the future health of the real estate market at a 99% confidence level. Key regulatory events such as the purchase restriction in 2010 and Three Red Lines policy in 2020 also played a crucial role in altering the predictive power of the Altman Z score.

Download

This thesis is restricted to the Claremont Colleges current faculty, students, and staff.

Share

COinS