Evaluation of Information Content of Ranking Indicators Based on Financial Health and Early Warning System at Banks by TOPSIS Method

Due to the increasing importance of the issue of ranking in the banking industry and the lack of a ranking system in accordance with the conditions of the country in this study, according to the ranking systems of reputable institutions in the world and its localization with Conditions of the country provided the indigenous ranking system and evaluated it with financial health indicators and early warning system.

For this purpose; After identifying the criteria used in evaluating the ranking of reputable institutions using the opinion of banking and academic experts, 35 criteria for ranking were extracted and using data from 15 banks listed on the Tehran Stock Exchange, during the period 2015-2019 to TOPSIS method, banks were ranked and evaluated using financial health and early warning system indicators.

From the experts' point of view, quantitative indicators including financial dimensions (liquidity, profitability, capital and asset risk), qualitative dimensions (complexity and behavior of banks) and environmental dimensions (economic variables, government support and industry characteristics) are effective in the local bank ranking model.

The results of this study showed a positive and significant relationship between the proposed ranking model and financial health indicators and early warning system.

 This evidence suggests attention to the proposed indicators for the evaluation and ranking of banks, which can be used by rating agencies and bank officials.