IDEAS home Printed from https://ideas.repec.org/a/zbw/espost/224976.html
   My bibliography  Save this article

The Impact of Exchange Rate volatility on Banking Performance (case of Iran)

Author

Listed:
  • Keshtgar, Nafiseh
  • Pahlavani, Mosayeb
  • Mirjalili, Seyed Hossein

Abstract

Banks play an important role in the Iranian economy which has a bank-based financial system. We examined the impact of exchange rate volatility as a determinant of banks' performance. In recent years, the exchange rate has been volatile in the Iranian economy and have an adverse effect on banks' performance. This study, investigate the issue for the period 2007-2017 for 14 Iranian banks. Exchange rate fluctuations are derived by GARCH method and the effect of its fluctuations on bank performance examined using panel data method. In order to evaluate banks' performance, we used two criteria, namely liquidity and profitability. Estimation of econometric model using panel data by random effects indicated that exchange rate volatility has a negative and statistically significant effect on banks' capital return ratio. Exchange rate volatility is also a determinant in increasing the ratio of lending to total bank deposits, as it increases the financial gap and creates the credit risk that the gap entails.

Suggested Citation

  • Keshtgar, Nafiseh & Pahlavani, Mosayeb & Mirjalili, Seyed Hossein, 2020. "The Impact of Exchange Rate volatility on Banking Performance (case of Iran)," EconStor Open Access Articles and Book Chapters, ZBW - Leibniz Information Centre for Economics, vol. 12(1), pages 39-56.
    • Handle: RePEc:zbw:espost:224976
    DOI: 10.22111/ijbds.2020.5436
    as

    Download full text from publisher

    File URL: https://www.econstor.eu/bitstream/10419/224976/1/IJBDS_Volume%2012_Issue%201_Pages%2039-56.pdf
    Download Restriction: no
    File URL: https://libkey.io/10.22111/ijbds.2020.5436?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Taslima Akther & Mushfiqur Rahman & Md. Mufidur Rahman, 2023. "Factors influencing commercial bank profitability in Bangladesh: a panel data approach," Future Business Journal, Springer, vol. 9(1), pages 1-20, December.
    2. Mirjalili, Seyed Hossein & Pahlavani, Mosayb & Heydarian, Samira, 2025. "Financial Sanction, Exchange Rate Volatility and Macroeconomic Variables (Case of Iran)," EconStor Open Access Articles and Book Chapters, ZBW - Leibniz Information Centre for Economics, vol. 9(2), pages 70-106.
    3. Keshtgar, Nafiseh & Pahlavani, Mosayeb & Mirjalili, Seyed Hossein, 2020. "The Impact of Macroprudential Policies on the Vulnerability of the Banking System: Dynamic Panel Model," Journal of Money and Economy, Monetary and Banking Research Institute, Central Bank of the Islamic Republic of Iran, vol. 15(4), pages 357-379, October.
    4. Nitescu Dan Costin & Anghel Cristian Marius, 2025. "Bank Syndication – A Premise for Increasing Bank Performance or Diversifying Risks?," Economics - The Open-Access, Open-Assessment Journal, De Gruyter, vol. 19(1), pages 1-23.

    More about this item

    Keywords

    Volatility; Exchange Rate; Banks' Performance; Panel Data; Iranian Economy;
    All these keywords.

    JEL classification:

    • N10 - Economic History - - Macroeconomics and Monetary Economics; Industrial Structure; Growth; Fluctuations - - - General, International, or Comparative
    • G01 - Financial Economics - - General - - - Financial Crises
    • E44 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Financial Markets and the Macroeconomy
    • C22 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:zbw:espost:224976. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: ZBW - Leibniz Information Centre for Economics (email available below). General contact details of provider: https://edirc.repec.org/data/zbwkide.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.