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Predicting Bank Profitability in Iran by Fuzzy Inference System

Author

Listed:
  • Saeidi , Azadeh

    (International University of Persian Gulf)

  • Yousefi Hajiabad , Reza

    (Payame Noor University)

Abstract

The main purpose of this study is to develop a Fuzzy inference system to predict bank profitability in Iran and help investors in their investment decisions. For this purpose, the main effective variables on bank profitability, including facilities, deposits, manpower costs, and assets were recognized. In the next step, the data of 13 banks were collected from 2001 to 2011. The membership functions and Fuzzy rules were developed in the MATLAB software and then, Fuzzy inference system was developed. The findings revealed that the system has an appropriate performance in predicting profitability of Iranian banks and rarely makes any error in this area. The predicted profitability of many banks has increased during the study period and also the predicted profitability of private banks was more than public banks. The banks of Industry and Mine and Karafarin Bank had the least profitability and Mellat Bank had the highest. Finally, Post Bank had the most errors while Mellat Bank had the fewest errors.

Suggested Citation

  • Saeidi , Azadeh & Yousefi Hajiabad , Reza, 2015. "Predicting Bank Profitability in Iran by Fuzzy Inference System," Journal of Money and Economy, Monetary and Banking Research Institute, Central Bank of the Islamic Republic of Iran, vol. 10(4), pages 51-77, October.
    • Handle: RePEc:mbr:jmonec:v:10:y:2015:i:4:p:51-77
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    References listed on IDEAS

    as
    1. Jacob A. Bikker & Haixia Hu, 2002. "Cyclical patterns in profits, provisioning and lending of banks and procyclicality of the new Basel capital requirements," Banca Nazionale del Lavoro Quarterly Review, Banca Nazionale del Lavoro, vol. 55(221), pages 143-175.
    2. García-Herrero, Alicia & Gavilá, Sergio & Santabárbara, Daniel, 2009. "What explains the low profitability of Chinese banks?," Journal of Banking & Finance, Elsevier, vol. 33(11), pages 2080-2092, November.
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    Cited by:

    1. Zhou, Di & Qiu, Yuan & Wang, Mingzhe, 2021. "Does environmental regulation promote enterprise profitability? Evidence from the implementation of China's newly revised Environmental Protection Law," Economic Modelling, Elsevier, vol. 102(C).

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    More about this item

    Keywords

    Fuzzy Inference System; Bank profitability; Membership Function; Linguistic labeling; Facilities;
    All these keywords.

    JEL classification:

    • E59 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Other
    • C61 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Optimization Techniques; Programming Models; Dynamic Analysis
    • G24 - Financial Economics - - Financial Institutions and Services - - - Investment Banking; Venture Capital; Brokerage

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