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Rating of Iran banking sector based on CAMELS model

Morteza Asadi, Abbas Mohammadi and Ali Akbar Alah Bakhshi

articles of Journal of financial analysis, 2020, vol. 3, issue 1, 47-70

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.

Keywords: Rating; Banking Soundness; CAMELS Model; Banking Supervision; Financial Ratios (search for similar items in EconPapers)
JEL-codes: G21 G4 (search for similar items in EconPapers)
Date: 2020
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Handle: RePEc:adw:journl:y:2020:v:3:i:1:p:47-70