Assessment and Presentation of a Proper Paradigm to Identify, Measure, and Control Financial Risks in Financial and Credit Institutions (Case Study of Mellat Bank)

Financial and credit institutions are threatened by different types of risks. The main objective in this research is to assess and present a proper paradigm to identify, measure, and control financial risks in financial and credit institutions. The method of research according is applied upon implementation and correlation methods, and ex-post facto is accomplished in Bank Mellat. Sampling is intentional, and the sample volume was determined by the researcher. Required data for this research were collected daily from 39 regional offices of Mellat Bank between 2005 and 2007. Structural Equation Modeling (SEM) and Linear Structural Relationships (LISREL) were used to analyze the research data. This study shows that the impact of loans and investment on liquidity risk, the impact of assets and foreign currency debts on foreign currency risk, and the impact of interest sensitive assets and debts volatility variant on interest risks are meaningful.