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

Author

Listed:
  • Ahadifar , Alireza

    (Department of Economic Sciences; Faculty of Economics and Management; University of Tabriz; Tabriz; Iran)

  • Karimi Takanlo , Zahra

    (Department of Economic Sciences; Faculty of Economics and Management; University of Tabriz; Tabriz; Iran)

  • ranjpour , Reza

    (Department of Economic Sciences; Faculty of Economics and Management; University of Tabriz; Tabriz; Iran)

  • Haghighat , Jafar

    (Department of Economic Sciences; Faculty of Economics and Management; University of Tabriz; Tabriz; Iran)

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.

Suggested Citation

  • Ahadifar , Alireza & Karimi Takanlo , Zahra & ranjpour , Reza & Haghighat , Jafar, 2021. "Investigation of Factors Affecting Banking Leverage in Selected Iranian Banks (Random-Coefficients Approach)," Journal of Money and Economy, Monetary and Banking Research Institute, Central Bank of the Islamic Republic of Iran, vol. 16(1), pages 21-42, March.
    • Handle: RePEc:mbr:jmonec:v:16:y:2021:i:1:p:21-42
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    1. agarwal, shekhar & Gordon, Anna, 2022. "Complexities for the Indian Economy of China's Growing Technological Competence," OSF Preprints fk3r7, Center for Open Science.
    2. agarwal, shekhar, 2022. "India’s Rising Technology Economy: Sources and Consequences," OSF Preprints x6yzm, Center for Open Science.

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    More about this item

    Keywords

    Banking Leverage; Structural Factors; Organizational Factors; Financial Crisis; Swamy Model.;
    All these keywords.

    JEL classification:

    • C33 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Models with Panel Data; Spatio-temporal Models
    • D23 - Microeconomics - - Production and Organizations - - - Organizational Behavior; Transaction Costs; Property Rights
    • F62 - International Economics - - Economic Impacts of Globalization - - - Macroeconomic Impacts
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages

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