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

Author

Listed:
  • József Varga

    (Department of Finance, Kaposvár University, Kaposvár, Hungary
    Department of Finance, Corvinus University of Budapest, Fõvám tér 8, Budapest, H-1093, 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)

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.

Suggested Citation

  • József Varga & Gyöngyi Bánkuti & Rita Kovács-Szamosi, 2020. "Analysis of the Turkish Islamic Banking Sector Using CAMEL and Similarity Analysis Methods," Acta Oeconomica, Akadémiai Kiadó, Hungary, vol. 70(2), pages 275-296, June.
    • Handle: RePEc:aka:aoecon:v:70:y:2020:i:2:p:275-296
    DOI: 10.1556/032.2020.00014
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    Citations

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    Cited by:

    1. Hao Liu & Weilun Huang, 2022. "Sustainable Financing and Financial Risk Management of Financial Institutions—Case Study on Chinese Banks," Sustainability, MDPI, vol. 14(15), pages 1-18, August.
    2. Dania AL-Najjar & Hamzeh F Assous, 2021. "Key determinants of deposits volume using CAMEL rating system: The case of Saudi banks," PLOS ONE, Public Library of Science, vol. 16(12), pages 1-15, December.

    More about this item

    Keywords

    Turkish Islamic bank sector; Islamic finance; CAMEL; Similarity Analysis; Component-based Object Comparison for Objectivity (COCO);
    All these keywords.

    JEL classification:

    • G01 - Financial Economics - - General - - - Financial Crises
    • G15 - Financial Economics - - General Financial Markets - - - International Financial Markets
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages

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