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Measuring the Effect of Competition on the Profitability of Banks in Iran and Member Countries of the Organization of Islamic Cooperation
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Marzieh Rafieian Esfahani1   , Saeed Daei-Karimzadeh *2 , Mahshid Shahchera3 , Sara Ghobadi4 |
1- PhD Student, Department of Economics, Isfahan (Khorasgan) Branch, Islamic Azad University, Isfahan, Iran.
2- Associate Professor, Department of Economics, Isfahan (Khorasgan) Branch, Islamic Azad University, Isfahan, Iran. (Corresponding Author)
3- Assistant Professor, Monetary and Banking Research Institute, Tehran, Iran.
4- Assistant Professor, Department of Economics, Isfahan (Khorasgan) Branch, Islamic Azad University, Isfahan, Iran. |
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Abstract: (1213 Views) |
| In recent years, banks have been affected by a number of market developments: deregulation, liberalization, globalization, and various innovations, each of which affects the competitive conditions of banks. Just as banks' market power affects their profitability, competitive behavior affects financial soundness and stability. Therefore, the impact of competition on the banking system of 52 OIC member countries from 2004 to 2019 has been estimated by the Generalized Method of Moment. The Boone index has been used for this purpose. The Boone index results show that the competition capability in countries' banking systems is improving. Evidence also shows that among the variables under consideration, the non-performing loan ratio, return on deposits to GDP, and capital adequacy have the greatest impact on banks' profitability. In addition, the results indicate that the Boone index and the banking stability index affect banks' profitability. In addition, the relationship between all variables except the ratio of non-current receivables to profitability is positive and significant, so their growth increases the bank's profitability. Therefore, paying more attention to bank profitability and banking stability can create effective monetary and financial markets solutions. |
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Full-Text [PDF 1330 kb]
(632 Downloads)
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Type of Study: Case Study |
Subject:
International Finance (F3)
Received: 2020/12/5 | Accepted: 2021/05/24 | Published: 2021/09/28
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