Presenting and Evaluating the Banks Rating Model Using TOPSIS Technique

Document Type : Research Paper

Authors

1 PhD Student, International Branch, Shiraz University, Shiraz, Iran

2 Assistant Professor, Department of Accounting, Economics, Management and Social Sciences college, Shiraz University, Shiraz, Iran

Abstract

An appropriate rating system in banks can clarify the status and performance of banks for its users. Although many national and international rating institutions have been established, its absence is felt in our country. In a rating system, it is necessary to take into account the economic and environmental conditions of the country in order to evaluate the banks. For this purpose, in this research, 35 criteria are selected according to the opinion of 34 banking and academic experts, and using them, 15 banks in the 5-year period of 2014-2018 are ranked by the TOPSIS method. The findings show that the indicators related to financial dimensions (liquidity, profitability, capital and asset risk), qualitative dimensions (complexity and behavior of banks) and environmental dimensions (economic variables, government support and industry characteristics) are effective in the indigenous model of bank rating; In this regard, the financial health system and stock prices of banks are used to evaluate the indigenous model; The results show that the indigenous model has a positive and significant correlation with the financial health system; so that by identifying the position of the bank in the indigenous model, its position can be relatively described within the financial health system; Also, the results of the indigenous model show a positive and significant relationship with the stock prices of banks. This evidence draws attention to the proposed indicators for evaluating and rating banks.

Keywords

International Journal of Nonlinear Analysis and Applications
Volume 11, Special Issue
Winter and Spring 2020
Pages 195-209

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