Financial institutions specifically banks and small businesses have encountered
difficulty in sustaining their ability
to remain stable during the financial crisis. During this period most scholars
addressed the cause and risk of financial turbulence but very few studies identified the cost
of debt and risk of financial turbulence. The objective of this study is to
enhance the Mahalanobis model to include the measurements of cost of debt when
measuring financial turbulence which essentially has an impact on the stock
market. The data collected in respect of the South African Reserve Bank (SARB)
and Statistics South Africa (SAS) identifies the correlation of financial
turbulence in banks as well as small businesses and analyses and interprets the
relationship between total liquidation of companies and total assets of banks.
Although different countries had different industries contributing to the
financial crisis, this study is not industry based.
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