Analysis of Zmijewski Model's Accuracy in Predicting Potential Financial Distress for Indonesian Islamic Banking

Every banking activity and product has risks. Risk is the result or consequence of an activity during the process or in future circumstances that can cause losses. Financial Distress can be characterized by a decrease in various financial ratios, a reduction in assets, a decline in sales, a decrease in profits and profitability levels, a reduction in working capital, and a continuous increase in debt. So, in this research, the author wanted to know the level of accuracy of the Altman z-score model in predicting potential financial Distress for Sharia Commercial Banks in Indonesia. The population used in this research was Sharia Commercial Banks registered with the Financial Services Authority. The sampling technique that the researchers used was purposive sampling, with a total sample of 12 Islamic commercial banks. The research results showed that only one bank experienced financial Distress, while 11 other banks experienced good economic conditions. The Zmijewski model is good because it has a high level of accuracy with a low error.