Iranian Banks Mergers and Structure of Loans

Azam Ahmadyan ()
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Azam Ahmadyan : Monetary and Banking Research Institute, Central Bank of the Islamic Republic of Iran

Journal of Money and Economy, 2020, vol. 15, issue 1, 75-100

Abstract: Iranian banking network policymakers are focused on bank consolidation as one of the reform policies in recent years. But before merging banks, it is necessary to examine their effects. Loans are one crucial item in the banks' balance sheets that are affected by bank consolidation. In the Iranian banking network, loans are offered to various economic sectors. What is important for banking policymakers is how the structure of loans will change as banks merge. Also, the effect of bank consolidation on loan structure is affected by the bank's ownership and its performance. Therefore, in this paper, we investigate the impact of bank mergers on loan structure of banks, using panel data model and financial statements of Iranian banks in 2006-2018. For this purpose, 28 models have been designed. Results indicate the merger of banks and the creation of private banks have a positive effect on the loan supply to services and the business sector. The merging of banks and the creation of state-owned banks will also have a positive impact on the loan supply to the industry and mining, construction, and housing sectors. Also, banks merger has a positive effect on the loan supply to services and the business sector.

Keywords: Bank Merger; Bank’s Ownership; Bank Healthy; Structure of Loans (search for similar items in EconPapers)
JEL-codes: C21 G21 G34 (search for similar items in EconPapers)
Date: 2020
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