Banks Investment and its Non-Linear Relationship with Soundness, in a Financially Repressed Economy (in Persian)

Alireza Sharif moghadassi (), Yeganeh Moosavi Jahromi (), Kamran Nadri (), Ramin Mojab () and Asghar Abolhasani ()
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Alireza Sharif moghadassi: Payam-e-Noor University
Yeganeh Moosavi Jahromi: Payam-e-Noor University
Kamran Nadri: Imam Sadegh University
Ramin Mojab: Alternate Text ŽæåÔ˜Ïå æáí æ ÈÇä˜í ÈÇä˜ ãјÒí ÌãåæÑí ÇÓáÇãí ÇíÑÇä Alternate Text Alternate Text Alternate Text Alternate Text Alternate Text Monetary and Banking Research Institute
Asghar Abolhasani: Payam-e-Noor University

Journal of Monetary and Banking Research (فصلنامه پژوهش‌های پولی-بانکی), 2017, vol. 10, issue 33, 353-382

Abstract: Reducing the moral hazard of contracts due to more symmetrical information between the borrower and the bank and reducing the efficiency of the customer validation process, respectively, are the most important advantage and disadvantage of an increase in credit institutions investment. In this regard, we examine the relationship between the bank health and bank investment in different aspects. The data include Iranian banks financial data during the period of 2006- 2015. Since policy maker set a threshold for banks investment ratios, we use non-linear estimation methods to examine this relationship. Also, we control influential factors impact such as the bankchr('39')s size, the role of the government in banks ownership structure, the nature of the activities of shareholders and related companies, the ownership concentration. The results show that bank investment has a positive effect on profitability, asset quality, liquidity and capital adequacy of the bank. However, it affects negatively on the role of the bank as a financial intermediation, In other words, three goals of 1) financial repression, 2) regulating the non-financial activities of the banks, and 3) which can maximize soundness of the banking system, are impossible trinity in the Iranian economy.

JEL-codes: C30 E58 G21 G31 (search for similar items in EconPapers)
Date: 2017
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Persistent link: https://EconPapers.repec.org/RePEc:mbr:jmbres:v:10:y:2017:i:33:p:353-382

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