Alireza Ahadifar; Reza Ranjpour; Zahra Karimi Takanlo; Jafar Haghighat
Abstract
The purpose of this study is to investigate the effect of intra-organizational and macro factors affecting banking leverage in selected Iranian banks in the presence of heterogeneous slope coefficients and cross-sectional dependence of residuals. For this purpose, the mean group estimators were ...
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The purpose of this study is to investigate the effect of intra-organizational and macro factors affecting banking leverage in selected Iranian banks in the presence of heterogeneous slope coefficients and cross-sectional dependence of residuals. For this purpose, the mean group estimators were used from 1999 to 2018 for selected 10 banks. Diagnostic tests showed that the hypotheses of cross-sectional dependence and heterogeneity of slope coefficients can not be rejected, so, the Augmented Mean Group estimator (AMG) was used. According to the results, the variables of credit risk and liquidity risk have positive and significant effects while the bank size has a negative and significant effect on bank leverage. Among macro and extra-organizational factors, inflation and real interest rates have positive effects and economic growth has a significant negative effect on the financial leverage of selected banks.
Teymour Mohammadi; Farzad i Eskandar; Davoud Karimi
Abstract
The purpose of this study is to investigate the effects of macroeconomic and bank-specific factors on non-performing loans for the period of 2005 to 2013. A dynamic panel data model is used in 18 banks and to assess non-performing loan, the ratio of non-performing loans to all granted loans has been ...
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The purpose of this study is to investigate the effects of macroeconomic and bank-specific factors on non-performing loans for the period of 2005 to 2013. A dynamic panel data model is used in 18 banks and to assess non-performing loan, the ratio of non-performing loans to all granted loans has been utilized. The results of Generalized Method of Moments (GMM) indicate that among all considered macroeconomic variables, economic growth has a negative effect, the gap between real interest rate in informal market and the real interest rate in formal market and also exchange volatility have positive effect on the ratio of NPLs to all granted loans. The results of bank-specific factors show that capital adequacy ratio, deposit to expenditure ratio, as an indication of economic efficiency, and share of each bank in total loans granted, as a proxy for banks' size, all have a significant negative influence on non-performing loans. The result confirms that “Bad Management hypothesis”, in which the increase of total expenditure efficiency leads to reduction in non-performing loans and “Market Strength and Stability hypothesis”, in which the banks with higher market power has less due date non-performing loans are both confirmed.