Farahnaz Tohidi
Abstract
The exposure of the major part of the global banking system to the financial crisis of 2007-2009 prompted legislators to increase their regulations and supervision in order to prevent future problems. However, banks must fulfill one of their main tasks which involves the creation of liquidity in the ...
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The exposure of the major part of the global banking system to the financial crisis of 2007-2009 prompted legislators to increase their regulations and supervision in order to prevent future problems. However, banks must fulfill one of their main tasks which involves the creation of liquidity in the economy. The question arises whether more supervision of banks leads to increased bank liquidity? The purpose of this study is to investigate the effect of risk-based supervision on creating liquidity in Iranian banks. To this aim, the data belonging to 15 governmental and private banks in the period of 1394 to 1399 (2015-2020) were analyzed through the combined regression method. To measure liquidity creation, the researcher employed the approach of Berger and Bowman (2009), and the ratio of total due claims and overdue claims to the total bank facilities was used as a risk-based supervision index. The results showed that risk-based supervision has a significant and positive effect on creating liquidity.
Zahra Zamani; Abolfazl Jannaeti; Maryam Ghorbani
Volume 4, Issue 8 , June 2018, , Pages 81-104
Abstract
Nowadays, bank as the most important element of the financial market plays a significant role in the countries' economy especially Iran, which relies on the banking system. So the study of banking system and factors affecting its performance are very important. One of these factors is the exchange rate, ...
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Nowadays, bank as the most important element of the financial market plays a significant role in the countries' economy especially Iran, which relies on the banking system. So the study of banking system and factors affecting its performance are very important. One of these factors is the exchange rate, a key variable in every economy. In recent years, the exchange rate in the Iranian economy has encountered many fluctuations. Exchange rate fluctuations in developing countries like Iran, due to the lack of developed financial markets, expose these countries to financial crises. The exchange rate fluctuations and the volatility of financial markets can have an unfavorable impression on the stability of banks. This is due to the lack of the ability in eliminating the impact of exchange rate fluctuations even by using the risk management techniques; and on the other hand, developing countries do not have the essential tools to deal with these fluctuations. Thus, these countries are more vulnerable, and more likely exposed to financial crisis. Therefore, this study investigates the impact of exchange rate fluctuations on the performance of Iranian banking system using Generalized Method of Moments (GMM) in dynamic panel data context during 2009-2014. To evaluate the banking performance, two criteria of revenue and asset quality have been considered and for evaluating these criteria accordingly, the ratio of return on assets as well as the ratio of outstanding claims to total paid facilities has been applied. The results of this study show that the exchange rate volatility has negative significant impact on the return on assets of banks. The exchange rate fluctuations impose different types of risks on banking system such as transaction risk, conversion risk, credit risk, interest rate risk and due to these risks, the profitability of banks decrease. Similarity, exchange rate fluctuations are an effective and positive factor in clarifying the ratio of outstanding claims to the total payable facilities of banks because they lead to create credit risk, and as a result increase outstanding claims of banks.
