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Paper Information

Journal:   IRANIAN JOURNAL OF BUSINESS AND ECONOMICS   JUNE 2014 , Volume 1 , Number 2; Page(s) 0 To 0.
 
Paper: 

A TRIPARTITE FINANCIAL RATING FRAMEWORK FOR THE BANKING INDUSTRY: FINANCIAL PERFORMANCE, STRENGTH AND DISTRESS RATING

 
 
Author(s):  RAHDARI AMIR HOSSEIN*, VOJOUDI NOBAKHT ARMIN, ESMAILPOUR OMID
 
* TARBIAT MODARES UNIVERSITY, TEHRAN, IRAN
 
Abstract: 

Financial evaluation is the part and parcel of the business performance evaluation and it is more tangibly discussed in the banking industry due to the central role that banks play in the supply and demand mechanisms of money and credit in the economic system. However, financial evaluation, by and large, has been confined to financial performance assessment. In this study, we present a tripartite framework for assessing and rating banks in accordance with their financial performance, financial strength and financial distress status using 33 criteria. We utilize entropy and TOPSIS methods respectively for weighting and rating of banks. We utilize data from ten commercial banks listed on Tehran Stock Exchange (TSE). The contributions of the study is two-fold. Firstly, we utilize diverse quantitative and qualitative factors to account for the financial performance, financial strength and financial distress positions of the banks which give new perspectives into the financial stability of the banks. Secondly, the proposed framework can be used extensively in the banking industry as well as other settings for short-term, medium-term and long-term evaluations. The result of the study shows that banks A10, A6 and A3 have averaged the best along all three ratings.

 
Keyword(s): FINANCIAL PERFORMANCE, FINANCIAL STRENGTH, TOPSIS, RATING, BANKING
 
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