Rating Iran's Banks based on CAMEL Indices Using RAM Model

Paying attention to the growth of organizations, in line with sustainable development of the countries, has always been one of the policies of the managers of all organizations among which are banks. An examination of the desirable trend of a bank can only be done by measuring its performance based on standard criteria, comparing that bank with other banks and, finally, ranking them among the banks. In this research, the model of efficiency calculation in data envelopment analysis was used to rank the banks of the country based on CAMEL standard indices. Among the data envelopment analysis models, the modified domain model (RAM) is capable of considering both inputs and outputs simultaneously, presenting a numerical index for efficiency and accepting negative input and output. Thus, the RAM model has been used as the basis for ranking banks in this research. In order to examine and evaluate the performance of the banks, the financial ratios extracted from the financial statements of banks were used. These ratios were obtained to cover five characteristics of CAMEL, namely, capital adequacy, asset quality, management, profitability and liquidity. According to the results of the research, five banks, Karafarin, Dey, Sina and Pasargad banks, were the most efficient among the 12 selected banks.