Investigating the Role of Economic Sanctions on the Interaction of Banking Health Index and Bank’s Profitability

Laki, Zahra; Bagheripormehr, Sholeh

doi:10.22034/jifb.2023.400728.1460

Investigating the Role of Economic Sanctions on the Interaction of Banking Health Index and Bank’s Profitability

Document Type : Original Article

Authors

Zahra Laki ¹

Sholeh Bagheripormehr ²

¹ University of Khatam، Tehran، Iran

² Khatam University, Tehran, Iran

https://doi.org/10.22034/jifb.2023.400728.1460

Abstract

Financial institutions, including banks, are considered as the vital element of an economic system. Therefore, banks play a vital role in the economy of a country. On the other hand, economic sanctions cause problems in banking and other economic sectors of the country. Financial health and profitability of banks are among the factors that have been affected by economic sanctions. Economic sanctions can affect the financial health and profitability of banks in different ways. Therefore, in this research, the effect of economic sanctions on the relationship between the banking health index and the profitability of banks during the time period of 1390-1400 has been investigated with the panel data regression method. In addition, in this research, the effect of some macroeconomic changes such as economic growth rate, inflation rate, and liquidity on banks' profitability have been investigated. The findings revealed that sanctions had a negative and significant effect on the relationship between the banking health index and banks' profitability. Another important finding is that the macroeconomic variables used in the research, except for the liquidity variable, which had no significant effect on banks' profitability, had a positive and significant effect on banks' profitability.

Keywords

Banking health index

Bank profitability

Economic sanctions

Panel data regression