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

Author

Listed:
  • Seraj, Soodabeh

    (Iran)

  • Taheri, Mandana

    (Iran)

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

Suggested Citation

  • Seraj, Soodabeh & Taheri, Mandana, 2012. "Banking Supervision, Based on an Early Warning System, Using CAMEL Ratios and a Logit Model (in Persian)," Journal of Monetary and Banking Research (فصلنامه پژوهش‌های پولی-بانکی), Monetary and Banking Research Institute, Central Bank of the Islamic Republic of Iran, vol. 4(12), pages 45-70, September.
    • Handle: RePEc:mbr:jmbres:v:4:y:2012:i:12:p:45-70
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    More about this item

    Keywords

    Banking Supervision; Early Warning System; CAMEL Ratios; Logit Model;
    All these keywords.

    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G33 - Financial Economics - - Corporate Finance and Governance - - - Bankruptcy; Liquidation
    • M42 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - Auditing

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