The Impact of Regulatory Policies on Volatility under Prudential Framework

Jahangir Biabani () and Mohammad Valipour Pasha ()
Additional contact information
Jahangir Biabani : Payam Noor University
Mohammad Valipour Pasha : Banking Department, Monetary and Banking Research Institute, Central Bank of the Islamic Republic of Iran

Journal of Money and Economy, 2016, vol. 11, issue 1, 53-70

Abstract: Utilizing finance conceptual framework, this paper applies a Frontier-Volatility analysis to illuminate regulatory policies effects on volatility under Iranian Banking Prudential Framework over the period 2003 to 2015 using the raw database collected, classified and compiled by the Rahavard Novin Co. version 3, Securities and Stock Exchange Organization. Findings portray that volatility is affected by the regulatory policies. Tighter regulatory controls will lead to higher volatility that makes it tough for the central bank to regulate the system for culminating financial stability as well as difficulty of entry for the investors. Regulatory policies' positive variations will also lead to lower share revenues as well as a decrease in the earning per share (EPS) that will make it volatile and also will heighten the liquidity risk causing volatility as well as lower investment and shared revenues fluctuate the performance. Furthermore, economic growth has been ineffective on volatility in the current period although its effect has been positive and significant in the first lag period. Higher assets circulations cause higher and significant volatility. The debt proportion coefficient is positive and significant as expected that financial institutions gain more through higher leverage leading to higher volatilities in earnings.

Keywords: Regulatory policy; Volatility; Industry competitiveness structure; Frontier analysis (search for similar items in EconPapers)
JEL-codes: C51 C58 G21 (search for similar items in EconPapers)
Date: 2016
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
http://jme.mbri.ac.ir/article-1-256-en.pdf (application/pdf)
http://jme.mbri.ac.ir/article-1-256-en.html (text/html)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:mbr:jmonec:v:11:y:2016:i:1:p:53-70

Access Statistics for this article

More articles in Journal of Money and Economy from Monetary and Banking Research Institute, Central Bank of the Islamic Republic of Iran Contact information at EDIRC.
Bibliographic data for series maintained by M. E. ().