Track: Systems Dynamics

Abstract

Banks need a way to evaluate performance and consider some important financial ratios and find the strengths and weaknesses. The banking system is one of the most important economic sectors in the Iran that has the most relationships with the country's macroeconomic; therefore, any kind of volatility and instability in it can influence the country's macroeconomics. Therefore, assessing the performance of the country's banking industry and analyzing the banking soundness is important. One of the more conventional methods to analyze and evaluate the banking soundness is using the CAMELS rating system which has six dimensions included to measure the performance of the bank. Each of these dimensions has many components and together with the variables that influence them and the interactions between them constitute a complex economic and monetary system. In this study, using the system dynamics approach, a systemic analysis of the structure of this issue will be provided. The results show that the factors Incomes and Expense are the most important issues of an Iranian bank in managing banking soundness and the way out of them is the development of these two factors.