"Islamic Finance Researches" (IFR)

Identification and ranking of credit risk management tools in banking with fuzzy multi criteria decision-making methods

Document Type : Science - Research (Islamic Risk Management Tools)

Authors

1 Assistant Professor, Department of Industrial Engineering, Faculty of Engineering, Meybod University, Meybod, Iran

2 MSc student Industrial Engineering, Faculty of Engineering, Meybod University, Meybod, Iran

Abstract

Banks are one of the main pillars of any country's economic system and their proper functioning will lead to the country's economic development. Due to the increasing demand for bank facilities and the risk in these activities, it is necessary to examine the risk management tools to organize, control and manage the credit risk of banks. In this study, by examining the literature and collecting information from experts through snowball sampling, credit risk management tools in banks in the form of 15 tools were extracted. Then, by compiling a questionnaire and obtaining the experts' opinions, eight final tools were selected and ranked using fuzzy Vikor, fuzzy TOPSIS, and fuzzy vaspas methods. In order to determine the final ranking of instruments based on the results obtained from fuzzy methods, two techniques of mean averaging and Copeland were used. The results showed that collateral and guarantee are the most important tools in credit risk management. Also, the design of the credit rating system and the facility ceiling determination are in the next ranks. Therefore, banks need to pay special attention to these tools to control and manage their credit risk.

Keywords

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Volume 10, Issue 2 - Serial Number 20
May 2021
Pages 713-756
  • Receive Date: 24 June 2021
  • Revise Date: 17 July 2021
  • Accept Date: 04 September 2021