Assessing competition and financial stability in the banking system by assessing capital and losses in crisis

Masoudian, Maryam Sadat; Fallahshams, Mirfeiz; Zomorodian, Gholamreza

doi:10.22096/esp.2022.130383.1369

Assessing competition and financial stability in the banking system by assessing capital and losses in crisis

Document Type : Original Article

Authors

Maryam Sadat Masoudian ¹

Mirfeiz Fallahshams ²

Gholamreza Zomorodian ³

¹ PhD student in Department of Financial Management, Central Tehran Branch, Islamic Azad University, Tehran, Iran.

² Associate Professor, Department of Business Management,, Central Tehran Branch, Islamic Azad University, Tehran, Iran.

³ Assistant Professor, Department of Business Management, Central Tehran Branch, Islamic Azad University, Tehran, Iran.

10.22096/esp.2022.130383.1369

Abstract

The purpose of this article was to assess competition and financial stability in the country's banking system by assessing capital and losses in times of crisis. In this study, using statistical information of banks listed on the Tehran Stock Exchange for the period 2006-2018, using the method of panel autoregression data, the relationship between macroeconomic variables with banking stability and banking competition was examined. The results showed that economic growth has led to an increase in banking stability and banking competition among the country's banks. On the other hand, banking stability has had a positive and significant impact on economic growth and banking competition. Finally, the results of the action-response charts and analysis of variance showed that the shock of the banking competition led to a positive reaction to economic growth and banking stability. The results indicate a significant relationship between competition and stability and confirming the view of fragility competition in Iran's banking industry. Also, the results of Granjer causality test showed the existence of a two-way relationship between the variables.

Keywords

Banking competition

economic growth

stability

market structure

VECM model

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