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CAMELS-based Determinants for the Credit Rating of Turkish Deposit Banks

International Journal of Finance & Banking Studies

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Title CAMELS-based Determinants for the Credit Rating of Turkish Deposit Banks
 
Creator Yuksel, Serhat; Department of Board of Auditors, Finansbank, İstanbul
Dinçer, Hasan; IStanbul MEdipol University
Hacioglu, Umit; Istanbul Medipol University
 
Subject Banking and Finance
Banking; Credit Rating; CAMELS; Analysis; Deposits
 
Description This paper demonstrates the relationship between CAMELS ratios and credit ratings of deposit banks in Turkey. Annual data was used for the period between 2004 and 2014 in this study. Moreover, 20 deposit banks of Turkey were analyzed and 21 different ratios of CAMELS components were used. In addition to that, credit ratings of these banks were provided from Moody’s corporation or annual activity reports of the banks. After that, we created multi nominal logistic regression analysis in order to illustrate the relationship. The major finding in this study is that three components (Asset Quality, Management Quality, and Sensitivity to Market Risk) of CAMELS have effects on credit ratings whereas the ratios related to Capital Adequacy and Earnings are not effective. As a result, it was recommended that Turkish deposit banks should concentrate on the percentage of fixed assets and interest income to have a better rating. Moreover, having high market share with respect to total assets and lower interest expense are also other important points for this purpose. On the other hand, Turkish deposit banks should control the proportion of financial assets and increase the amount of FX liquid assets to prevent credit ratings to decrease. Additionally, market share of banks for loans should not reach at high level for this objective.
 
Publisher SSBFNET
 
Contributor —
 
Date 2015-10-12
 
Type info:eu-repo/semantics/article
info:eu-repo/semantics/publishedVersion
Peer-reviewed Article
 
Format application/pdf
 
Identifier http://www.ssbfnet.com/ojs/index.php/ijfbs/article/view/460
 
Source International Journal of Finance & Banking Studies (ISSN: 2147- 4486); Vol 4, No 4 (2015): October; 1-17
2147-4486
 
Language eng
 
Relation http://www.ssbfnet.com/ojs/index.php/ijfbs/article/view/460/439
 
Rights Copyright (c) 2015 International Journal of Finance & Banking Studies (ISSN: 2147- 4486)
http://creativecommons.org/licenses/by/4.0