Interactive scenario analysis of banking credit risks in intuitive fuzzy space
Journal of Modelling in Management
ISSN: 1746-5664
Article publication date: 3 December 2019
Issue publication date: 22 January 2020
Abstract
Purpose
The purpose of the paper is to bring attention to documentary credits and the efforts to reduce debt obligations in credit history is recognized as an important source of uncommitted bank earnings. Credit risk has a significant impact on the stability of the banking system. This paper identifies the types of credit risk in the banking supply chain.
Design/methodology/approach
The authors model the types of credit risk using the intuitive fuzzy failure modes and effects analysis (IFMEA) and intuitive fuzzy cognitive mapping. The population of the study that is needed for the interviews and expert panels comprises senior managers and experts of a leading bank in Iran. The respondents are experienced in credit and banking risk and were selected through judgment sampling and snowballing.
Findings
The findings suggest that reducing the risks of the foreign letters of credit contracts can mitigate the risk in the agricultural sector, the specific risks of rent-to-own contracts, the risk of the long-term facilities and the specific risk of the domestic letter of credit contracts.
Originality/value
This research investigates Iran Tejart Bank’s credit risk, formulates a model of the types of credit risk present and analyzes them using the intuitive fuzzy failure modes and effects analysis and intuitive fuzzy cognitive map. Through this credit risk model, one can then facilitate risk management for better financial stability. Also, the model can be used to evaluate the risk indicators.
Keywords
Acknowledgements
This work is supported by the Iran National Science Foundation (Grant No.: 96001832).
Citation
Jalilian, N., Zanjirchi, S.M. and Goh, M. (2020), "Interactive scenario analysis of banking credit risks in intuitive fuzzy space", Journal of Modelling in Management, Vol. 15 No. 1, pp. 257-275. https://doi.org/10.1108/JM2-01-2019-0011
Publisher
:Emerald Publishing Limited
Copyright © 2019, Emerald Publishing Limited