BANKOMETER MODEL: CAN FINANCIAL RATIOS PREDICT BANK INSOLVENCY?

This study investigates the effectiveness of the Bankometer Model, an S-score approach using key financial ratios (based on IMF guidance), in predicting the risk of bank failure in Azerbaijan between 2018 and 2023. We assess the model's practical relevance by comparing its main indicators— such as capital levels and loan quality—with the documented reasons, particularly capital shortfalls, that caused actual bank insolvencies in Azerbaijan during this period. While recognizing that relying only on financial ratios has limitations, our findings indicate the Bankometer model is a valuable tool for monitoring risks across the banking system.