Analysis of the Turkish Islamic Banking Sector Using CAMEL and Similarity Analysis Methods

József Varga (), Gyöngyi Bánkuti and Rita Kovács-Szamosi
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József Varga: Department of Finance, Kaposvár University, Kaposvár, Hungary
Gyöngyi Bánkuti: Department of Mathematics and Information Science, Faculty of Economic Science, Kaposvár University, Kaposvár, Hungary
Rita Kovács-Szamosi: Corvinus University of Budapest, Budapest, Hungary

Acta Oeconomica, 2020, vol. 70, issue 2, 275-296

Abstract: Rating the reliability of banks has always been an important practical problem for businesses and the economic policy makers. The best way to do this is the CAMEL analysis. The aim of this paper was to create a bank-rating indicator from the five fields of the CAMEL analysis using two-two indicators for each field for the Turkish Islamic banking system. According to the results of the analysis, we could rank the Turkish Islamic banks. Beside the widespread use of the CAMEL analysis, we applied the Similarity Analysis as a new method. We compared the results from the two methods and came to the conclusion that the CAMEL analysis does not adequately provide a fairly shaded picture about the banks. The Component-based Object Comparison for Objectivity (COCO) method gave us the yearly results in time series form. The comparison of the time series data leads to the problem of deciding about what is more important for us – average, standard deviation or the slope. For handling this problem, we used Analytic Hierarchy Process, which gave weights to these indicators.

Keywords: Turkish Islamic bank sector; Islamic finance; CAMEL; Similarity Analysis; Component-based Object Comparison for Objectivity (COCO) (search for similar items in EconPapers)
JEL-codes: G01 G15 G21 (search for similar items in EconPapers)
Date: 2020
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Citations: View citations in EconPapers (2)

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