Shahid Beheshti University Financial Management Perspective 2645-4637 10 32 2020 12 21 Assessment of the Effect of CAMELS Indicators on Risk-Adjusted Return on Capital (RAROC) in the Banks listed in Iran’s Stock Market Assessment of the Effect of CAMELS Indicators on Risk-Adjusted Return on Capital (RAROC) in the Banks listed in Iran’s Stock Market 57 80 101020 10.52547/JFMP.10.32.57 FA Mohammad Sadegh Abdollahi Poor MA in Financial Management, Allameh Tabataba’i University, Tehran, Iran 0000-0002-6084-7532 Mohammad Hashem Botshekan Associate Prof, Department of Finance and Banking, Allameh Tabataba’i University, Tehran, Iran. 0000-0002-1685-8808 Mostafa Sargolzaei Assistant Prof, Department of Finance and Banking, Allameh Tabataba’i University, Tehran, Iran. 0000-0002-8245-9258 Journal Article 2020 10 03 In this Research, The Risk-Adjusted Return on Capital (RAROC), as economic performance measurement and risk-adjusted index, was introduced and has been calculated for all the registered banks in the Tehran Stock Exchange and Over-the-Counter Market of Iran, based on contemporary methods which were extracted from earlier researches. The way in which this variable was calculated is one of the distinctions of this research. The period of this research is 8 years, from 2012 to 2019. At the next stage, the CAMELS indicators were introduced and their importance were declared. Then, the impact of these indicators on RAROC were assessed by a multiple linear regression model and Panel Data approach. The results illustrated this fact that there are numerous banks which even disclose net income in their financial statements, while based on RAROC index are not financially as safe as they seem.  Also, it has been concluded that Capital Adequacy ratio, Management Quality, Earnings Quality, and Liquidity Quality affect the RAROC. Meaning that, by improving those indicators, RAROC index will be enhanced. On the other hand, Asset Quality and Sensitivity to Market Risk have no significant effect on the RAROC. In this Research, The Risk-Adjusted Return on Capital (RAROC), as economic performance measurement and risk-adjusted index, was introduced and has been calculated for all the registered banks in the Tehran Stock Exchange and Over-the-Counter Market of Iran, based on contemporary methods which were extracted from earlier researches. The way in which this variable was calculated is one of the distinctions of this research. The period of this research is 8 years, from 2012 to 2019. At the next stage, the CAMELS indicators were introduced and their importance were declared. Then, the impact of these indicators on RAROC were assessed by a multiple linear regression model and Panel Data approach. The results illustrated this fact that there are numerous banks which even disclose net income in their financial statements, while based on RAROC index are not financially as safe as they seem.  Also, it has been concluded that Capital Adequacy ratio, Management Quality, Earnings Quality, and Liquidity Quality affect the RAROC. Meaning that, by improving those indicators, RAROC index will be enhanced. On the other hand, Asset Quality and Sensitivity to Market Risk have no significant effect on the RAROC. https://jfmp.sbu.ac.ir/article_101020_c98ef9c7736abd148cbdbd858f62b151.pdf