Interaction Effects of Bank Risk, Capitalization and Inefficiency in Iran’s Banking System

Yousefi Hajiabad, Reza; Hooshmand, Zohreh; Khoshnevis, Maryam

doi:10.22054/ijer.2018.8301

Authors

¹ Assistant Professor of Economics, Payame Noor University (PNU), Iran

² M.A. in Economics, Islamic Azad University, Semnan, Iran

³ Department of Economics, Semnan Branch, Islamic Azad University, Semnan, Iran

https://doi.org/10.22054/ijer.2018.8301

Abstract

The main purpose of this paper is to investigate the interaction effects of risk, capitalization and inefficiency in Iran's banking system. For this purpose, combined data of commercial and private banks of Iran in years (1999-2012), were collected and analyzed using simultaneous equation approach and fixed effects two-stage least squares (FE2SLS), The results confirm the belief that these three variables are simultaneously determined. The results indicate that relationship between inefficiency with quality of loans is significant and positive. Capitalization and loan growth have positive effect on inefficiency. Capital accumulation will decrease quality loans. Capital accumulation also has negative effects on the quality of banking risk indicator.On the other hand ,due to the inefficiency of the banking system's cost and return on assets on capital accumulation, banks that aren't in a good position in terms of performance, are not in a right position in terms of equipping and capital accumulation either.

Keywords

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Iranian Journal of Economic Research

Interaction Effects of Bank Risk, Capitalization and Inefficiency in Iran’s Banking System

References

References

Volume 22, Issue 73 - Serial Number 73
February 2019
Pages 131-157

Interaction Effects of Bank Risk, Capitalization and Inefficiency in Iran’s Banking System

References

References

Volume 22, Issue 73 - Serial Number 73February 2019Pages 131-157

Volume 22, Issue 73 - Serial Number 73
February 2019
Pages 131-157