The Relationship between Profitability, Bankruptcy Risk and Bank Credit by Selected Bank Sector Variables

• Main Authors: Abdollah Pakdel Moghanlo, Hasan Kouhi, Sanam Rahimzadeh Kolahi
• Format: Article
• Language: fas
• Published: Iran Banking Institute 2019-03-01
• Series: مطالعات مالی و بانکداری اسلامی
• Subjects: Profitability; Bankruptcy Risk; Credit risk
• Online Access: http://jifb.ibi.ac.ir/article_93912_23b46d36452f8325e0b18b764a6406bc.pdf
• ISSN: 2588-3569; 2588-4433

The purpose of this study is to examine the relationship between bank profitability, bankruptcy and credit risk and selected bank sector variables. The study population includes banks accepted in Tehran Stock Exchange from 2009 to 2017. To test the research hypotheses, dynamic panel data model has been used. The results of hypotheses testing indicate that there is a negative and significant relationship between the asset returns of the previous year, cash assets to total assets and the exchange rate with the return on assets. There are positive and significant relationships between the capital adequacy rate as well as inflation rate and the rate of return on assets of banks, between both cash assets to total assets and exchange rate and the return on equity ratio; and vice versa between the economic growth rate as well as inflation rate and the rate of return on salaries. There is a negative and significant relationship between cash assets to total assets, exchange rate and inflation rate and banks' bankruptcy risk. There is a positive and significant relationship between the economic growth rate and banks' bankruptcy risk and there is a positive and significant relationship between credit risk of the previous year, capital adequacy and credit risk of banks, and ultimately there is a negative and significant relationship between net assets and credit risk of banks.