Abstract: The recent financial crisis triggered by subprime crisis has caused hundreds of commercial banks to be closed in the USA. This provides an ideal opportunity for studying the bankruptcy of banks. This paper collects the sample of closed banks in the USA and their counterparts of normal banks to study the impact of financial factors on the banks' bankruptcy. Based on the univariate analysis to test the effectiveness of financial ratios, we construct a weighted Logit model and use contribution indices obtained from the model to analyze financial ratios' effect. The empirical results show that not only ROA, capital adequacy, ratio of net loans to asset and financial derivatives have significant influence on bankruptcy, but also the change of ROA and of ratio of net loans to asset do. Especially, although financial derivatives have been regarded as one of the main causes of this financial crisis, our empirical results indicate that it has a positive impact on the banks' stability.

Key words: bank failure, return of asset, ratio of net loans to asset, financial derivatives