Quarterly Studies in Banking Management and Islamic Banking

Abstract Today, banks are looking for performance improvement methods to surpass their competitors to increase market share and profitability. Since one of the most important issues and concerns for the banks are profits and returns, they use a variety of methods to attract more customers. Base on this reason, performance evaluation of banks is very crucial and important not only for their investors and depositors, also for their managers. This study examines the factors affecting the profitability of Iranian private banks in the period of 2006 to 2014 and focuses on the financial factors to increase the efficiency by the bank managers. The study is a correlational research and was conducted using analysis of historical data. In this study, according to 3 independent variables (size of the bank, operating efficiency, asset management), 6 hypotheses were formulated. The results show that there exists a significant relationship between the independent variables and profitability criteria (net interest income and return on assets of the banks). To test the research hypotheses, multivariate linear regression and panel data analysis were utilized.

Abstract Insolvency risk of banks accounted for a large part of the banking literature, especially after the global financial crisis and the subsequent widespread bankruptcies of the banks is of great importance. Most banks and credit institutions face with financial insolvency due to the lack of portfolio diversification of financing structure, lending large amount of loans to a particular industry or economic sector, and the lack of management and control of risks before they come into existence. Since the failure of the financial sector especially banks undermine public confidence in the financial system and as a result devastating effects is transferred on the entire economy, studying factors influencing the risk of insolvency is very important. Hence, the present study uses panel data model (unbalanced panel) and Generalized Least Squares (GLS) to test the effectiveness of the financing structure, credit risks, interest rate risk on insolvency risks of banks. Research data include financial information of 10 commercial public banks, private, and privatized banks under Article 44 during the priod of 2001 to 2012. The results show that specialization financing structure variable has a significant and direct effect on the risk of bank insolvency, while financing structure stability variable over the medium term (mid-term policy of banks lendings) has reverse and significant effect on the risk of bank insolvency. Also, the effect of interest rate risk, credit risk and liquidity risk on bank insolvency risk is significant and positive.