Investigation of Factors Affecting Banking Leverage in Selected Iranian Banks (Random-Coefficients Approach)

Alireza Ahadifar (), Zahra Karimi Takanlo (), Reza Ranjpour () and Jafar Haghighat ()
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Alireza Ahadifar : Department of Economic Sciences; Faculty of Economics and Management; University of Tabriz; Tabriz; Iran
Zahra Karimi Takanlo : Department of Economic Sciences; Faculty of Economics and Management; University of Tabriz; Tabriz; Iran
Reza Ranjpour: Department of Economic Sciences; Faculty of Economics and Management; University of Tabriz; Tabriz; Iran
Jafar Haghighat : Department of Economic Sciences; Faculty of Economics and Management; University of Tabriz; Tabriz; Iran

Journal of Money and Economy, 2021, vol. 16, issue 1, 21-42

Abstract: This study investigates the effect of intra-organizational and macroeconomic factors on banking leverage in selected Iranian banks. For this purpose, after calculation of the Banking Leverage for each bank, by using Random-Coefficients Approach (Swamy model), the impact of explanatory variables during the period of 1999-2016 was examined separately by 10 selected Iranian public and private banks. Based on calculations, Melli, Saderat, Refah, and Tejarat Bank had the highest and Sanat-va-Madan, Eghtesad-Novin, and Sepah had the lowest level of banking leverage. Furthermore; the results of estimations show that "organizational" and "structural-variables" of each bank have different effects on their banking leverage. For example, "credit risk" has a positive and significant effect on bank leverage in "Tejarat", "Saderat", "Refah" and "Sanat-va-Madan" banks. The effect of "liquidity risk" is the same as "credit risk". In general, due to banks' dissimilar structures, organizational and structural variables hold a varying impact on their banking leverage.

Keywords: Banking Leverage; Structural Factors; Organizational Factors; Financial Crisis; Swamy Model. (search for similar items in EconPapers)
JEL-codes: C33 D23 F62 G21 (search for similar items in EconPapers)
Date: 2021
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Citations: View citations in EconPapers (2)

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