Banking Supervision, Based on an Early Warning System, Using CAMEL Ratios and a Logit Model (in Persian)

Soodabeh Seraj () and Mandana Taheri ()
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Soodabeh Seraj: Iran
Mandana Taheri: Iran

Journal of Monetary and Banking Research (فصلنامه پژوهش‌های پولی-بانکی), 2012, vol. 4, issue 12, 45-70

Abstract: This paper evaluates the financial performance of Iranian banks, based on an early warning system, using Logit Predicting Model and presenting CAMEL ratios: Capital Adequacy, Asset Quality, Management, Earning, and Liquidity. For this purpose, we use financial data of 17 state and private banks during the period of 2005-2011. The results suggest that 6 ratios (from 17 rations of logit regression as independent variables) are able to assess/ evaluate and supervise the banking operation. In other words, central bank, by monitoring these 6 ratios, can apply early warning system and supervise banking system. In addition, results show that there is a significant difference between average of 12 financial ratios of state and private banks.JEL Classification: G21, G33, M42

Keywords: Banking Supervision; Early Warning System; CAMEL Ratios; Logit Model (search for similar items in EconPapers)
Date: 2012
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