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Rating of Iran banking sector based on CAMELS model

Author

Listed:
  • Morteza Asadi
  • Abbas Mohammadi
  • Ali Akbar Alah Bakhshi

Abstract

Performance of banking industry and analyzing banking soundness has a specific importance for banking supervisors, stockholders and depositors. Existence of appropriate system for banks rating will increase soundness and transparency of banking sector and identify its weaknesses. CAMELS rating system as an early warning system is the efficient system for determining the levels of risk those supervisory authorities of countries utilize it to evaluate financial, operational and managerial conditions of banks. The purpose of this study is rating the banking system of Iran (including 22 state and non-state banks) based on the CAMELS model, using audited financial statement information. According to the results of this research, most of the state banks of Iran were categorized as inefficient in fiscal year 2019. If controls and necessary measures are not performed, financial ratios will deteriorate and some of the large banks will go bankrupt and will create a vast economic crisis.

Suggested Citation

  • Morteza Asadi & Abbas Mohammadi & Ali Akbar Alah Bakhshi, 2020. "Rating of Iran banking sector based on CAMELS model," Journal of financial analysis, IJFADaghani, vol. 3(1), pages 47-70.
    • Handle: RePEc:adw:journl:y:2020:v:3:i:1:p:47-70
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    More about this item

    Keywords

    Rating; Banking Soundness; CAMELS Model; Banking Supervision; Financial Ratios;
    All these keywords.

    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G4 - Financial Economics - - Behavioral Finance

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