Investigating non-performing loans and ranking factors affecting credit risk in Iranian banking using DANP method

The credit risk and non-performing loans of banks are among the most important problems of the banking system in Iran. And according to available statistics, the average default of loans and non-performing loans of banks in Iran is much higher than the global average. The main purpose of this study is to identify and analyze the basic and important factors affecting credit risk in the Iranian banking system.

For this purpose, first, using the method of guided interviews with twenty experts and credit risk managers of the country's banking sector, who were selected by the snowball method, the most important factors affecting credit risk were identified; then, these factors were returned to the experts for ranking in the form of a pairwise comparison questionnaire, and finally, the important factors affecting this risk, along with their sub-factors were analyzed using denp technique (the dematel based analytic network process).

The results of the research show that the macroeconomic factors are the most important factor as well as instability in macroeconomic environment, failure to take timely and inappropriate actions with defaulters, poor and inadequate credit monitoring, ordered loans, and lengthy and time-consuming judicial procedures are the most important factors affecting risk credit in Iranian banking.

Originality/Value: 

The distinguishing feature of this study from other similar studies is the use of DANP technique to investigate the relationships between factors and sub-factors.