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The Impact of Capital Ratio on Iranian Banking Profitability (1380-1388) (in Persian)

Author

Listed:
  • Shahchera, Mahshid

    (Iran)

  • Jozdani, Nasim

    (Iran)

Abstract

This study investigates factors affecting the profitability of private and state banks using panel data over the period (2001-2009), based on the generalized method of moments (GMM).Return on equity is dependent variable and explanatory variable included loan to total asset, capital ratio and cost ratio. Concentration index and the Business Cycle as instrumental variables for dynamic panel data method (DPD) have been used. Capital ratio squared can be used in our model and the coefficients of these variables are significant. The liquidity to total assets, deposits ratio and loans to total asset have an inverse relationship. There are significant negative correlation between the cost ratio and profitability banking system in Iran. According to results business cycles and profitability have positive and significant relationship.JEL Classification: G32, G21

Suggested Citation

  • Shahchera, Mahshid & Jozdani, Nasim, 2012. "The Impact of Capital Ratio on Iranian Banking Profitability (1380-1388) (in Persian)," Journal of Monetary and Banking Research (فصلنامه پژوهش‌های پولی-بانکی), Monetary and Banking Research Institute, Central Bank of the Islamic Republic of Iran, vol. 4(12), pages 19-44, September.
    • Handle: RePEc:mbr:jmbres:v:4:y:2012:i:12:p:19-44
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    Citations

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    Cited by:

    1. Pejman Ebrahimi & Maria Fekete-Farkas & Parisa Bouzari & Róbert Magda, 2021. "Financial Performance of Iranian Banks from 2013 to 2019: A Panel Data Approach," JRFM, MDPI, vol. 14(6), pages 1-15, June.

    More about this item

    Keywords

    Profitability; Capital Ratio; Banking System; Dynamic Panel Data;
    All these keywords.

    JEL classification:

    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages

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