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:: year 13, Issue 46 (2-2021) ::
JMBR 2021, 13(46): 709-732 Back to browse issues page
Nonlinear effects of competition on the profitability of banks in OIC member countries
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.
Abstract:   (116 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 plays a role in their profitability, so does competitive behavior affect financial soundness and stability. Competition and a healthy market structure are important in social welfare, in other words, low prices, low interest rates and good loans to consumers and companies,including small and medium-sized investment companies.Banks are considered as the key institution of the money and capital market in the process of economic development of any country, and the continuous economic growth of a country is impossible without considering the market structure of such an institution. On the other hand, assessing the degree of market power of the banking system is very important. In this study, the level of competition in the banking system of 52OIC countries from 2004  to 2019 has been estimated using GMM method. For this purpose, the Boone index has been used. In the first stage, the Boone index has been calculated and in the second stage, the effect of this variable along with the variables of deposit ratio, capital adequacy, non-current receivables, central bank assets in the econometric model has been studied.The Z-SCORE profitability index is also used to measure stability. The results of the Boone index show that these are short-term trends at all times, in all cases. Findings also show that among the variables under study, Non- performing loan raito have the greatest effect on banks 'profitability and after this variable, the effect of deposit return on GDP in each country and capital adequacy has the greatest effect on banks' profitability. In addition, the relationship of all variables except Non- performing loan raito and profitability is positive and significant, so that their growth increases the profitability of banks. Finally, the results indicate that the two variables of Bonn index and banking stability also affect the profitability of banks.
Keywords: profitability, market power, banking system, competitive index
Full-Text [PDF 1330 kb]   (58 Downloads)    
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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year 13, Issue 46 (2-2021) Back to browse issues page
فصلنامه پژوهش‌های پولی-بانکی Journal of Monetary & Banking Research
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