"Islamic Finance Researches" (IFR)

Designing a Credit Rating Model for Iran’s Islamic Banks

Document Type : Science - Research (Islamic Banking)

Authors

1 PhD Student in Accounting, Allameh Tabataba’i University, Tehran, Iran.

2 Assistant Professor at Finance and Islamic Banking, Allameh Tabataba’i University, Tehran, Iran.

Abstract

In general, there are two kinds of bank rating by ranking institutions. ‘Independent ranking or monetary power’ and a ‘comprehensive or credit rating’. In the independent ranking, the intrinsic financial capacity of the bank is assessed without considering external support factors such as shareholders, but in a comprehensive or credit rating, the possible external support and its degree are assessed together with the intrinsic financial capacity in order to determine the bank's overall ranking. Most of the research done in Iran in regard to the banks’ and companies’ ranking has been of the independent or monetary power type. The present research has used the comprehensive rating for the first time to provide a model for credit rating of Iranian banks that have been accepted at the capital market and their financial information is available. In this research, by using theoretical foundations and empirical findings in the field of methodology of credit rating of banks, their dimensions, components and indicators have been studied, and by considering the Iranian environmental conditions, the related questionnaire was designed and handed out to a number of experts in the field of banks and credit institutions, and their views on the dimensions, components and indices of credit rating of banks according to the tests used led to the design of the final model including 4 dimensions, 13 components and 61 indicators.

Keywords

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Volume 9, Issue 1 - Serial Number 17
November 2019
Pages 327-366
  • Receive Date: 10 October 2018
  • Revise Date: 31 January 2019
  • Accept Date: 12 February 2019