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Analyzing the Effect of Macroeconomic Variables on the Insolvency Risk of Iranian Bank

Author

Listed:
  • Miraskari, Seyed Reza

    (Assistant Professor of Economics, University of Guilan)

  • Ranji, Fariborz

    (M.A. in Financial Management, University of Guilan)

  • Mousavini, Sayedmorteza

    (M. A. in Financial Management, University of Guilan)

Abstract

The financial stability of banks and the prevention of bank failures are very important as the core of monetary and financial activities. This study analyzes the impact of macroeconomic variables on insolvency risk of Iranian banks. In this regard, 18 state and private banks were studied for period 1386-1395. To test the hypothesis, the multivariate regression analysis and Generalized Method of Moments based panel data are used. The results of testing hypotheses show that inflation and GDP growth has a significant and positive impact on the insolvency risk and the fixed assets and securities owned index (average price of a square meter of housing units in 32 selected cities), liquidity, oil revenues and state tax revenues has a significant and negative impact on the insolvency risk. Also, control variables including credit risk and liquidity risk has a significant and positive impact on the insolvency risk and capital ratio and bank size has a significant and negative impact on the insolvency risk

Suggested Citation

  • Miraskari, Seyed Reza & Ranji, Fariborz & Mousavini, Sayedmorteza, 2019. "Analyzing the Effect of Macroeconomic Variables on the Insolvency Risk of Iranian Bank," Quarterly Journal of Applied Theories of Economics, Faculty of Economics, Management and Business, University of Tabriz, vol. 6(2), pages 29-46, August.
    • Handle: RePEc:ris:qjatoe:0147
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    More about this item

    Keywords

    GDP growth; Inflation; Liquidity; Oil revenues; Tax revenues; Insolvency risk of banks;
    All these keywords.

    JEL classification:

    • C58 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Financial Econometrics
    • E44 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Financial Markets and the Macroeconomy
    • G10 - Financial Economics - - General Financial Markets - - - General (includes Measurement and Data)
    • O23 - Economic Development, Innovation, Technological Change, and Growth - - Development Planning and Policy - - - Fiscal and Monetary Policy in Development

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