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JMBR 2017, 10(33): 353-382 Back to browse issues page
Banks Investment and its Non-Linear Relationship with Soundness, in a Financially Repressed Economy
Alireza Sharif moghadassi 1, Yeganeh Moosavi Jahromi1, Kamran Nadri2, Ramin Mojab3, Asghar Abolhasani1
1- Payam-e-Noor University
2- Imam Sadegh University
3- Alternate Text پژوهشکده پولی و بانکی بانک مرکزی جمهوری اسلامی ایران Alternate Text Alternate Text Alternate Text Alternate Text Alternate Text Monetary and Banking Research Institute
Abstract:   (4248 Views)

Reducing the moral hazard of contracts due to more symmetrical information between the borrower and the bank and reducing the efficiency of the customer validation process, respectively, are the most important advantage and disadvantage of an increase in credit institutions investment. In this regard, we examine the relationship between the bank health and bank investment in different aspects. The data include Iranian banks financial data during the period of 2006- 2015. Since policy maker set a threshold for banks investment ratios, we use non-linear estimation methods to examine this relationship. Also, we control influential factors impact such as the bank's size, the role of the government in banks ownership structure, the nature of the activities of shareholders and related companies, the ownership concentration. The results show that bank investment has a positive effect on profitability, asset quality, liquidity and capital adequacy of the bank. However, it affects negatively on the role of the bank as a financial intermediation, In other words, three goals of 1) financial repression, 2) regulating the non-financial activities of the banks, and 3) which can maximize soundness of the banking system, are impossible trinity in the Iranian economy.

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Received: 2017/10/22 | Accepted: 2017/12/11 | Published: 2018/02/6
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فصلنامه پژوهش‌های پولی-بانکی Journal of Monetary & Banking Research