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Information Journal Paper

Title

FACTORS DETERMINING CREDIT RISK IN THE ISLAMIC BANKING: THE CASE OF AGRICULTURAL BANK

Pages

 Start Page 79 | End Page 97

Abstract

 In this study we tried to specify factors determining the tisk of financial resources supplied to the demanders by BANK KESHAVARZI that operates under ISLAMIC BANKING operation. To this end, we developed a model based on logistic regression using financial and managerial information of 5690 corporate borrowers. Results indicate that previous defaults on Checks, number of banking accounts, the ratio of collateral values to loan values, the amount of money supolied, duration of loan, having guarntor, grace period, type of Islamic contract, the location of activity, and type of activity are important factors that affect the porfonnance of the loan repayment. In addition, results revealed that special event such as drought has considerable effect on probability of loan default. The calculated probability of default in this study revealed that the bank can reduce the probability of default to less than 10 percent by differentiating the risky demanders from less risky ones using the factors specified in this study.

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