The Power of Bank-Specific Variables in Explaining None-Performing Loans Ratio: Evidence from the Iranian Banking Sector

Document Type : Research Paper

Authors

1 Associate Professor of Accounting, Faculty of Social Sciences and Economics, Al-Zahra University

2 Ph.D. student of Accounting, Faculty of Social Sciences and Economics, Al-Zahra University

Abstract

Banking is a main sector in each economy.  Loan portfolio is the most important asset in banks, profit on loans accounts for main income in the banks. The loan quality is a key measure of the bank’s financial performance and stability. Therefore, the non-performing loan ratio measures a bank’s financial health.
This study investigated the power of bank-specific variables in explaining the non-performing loan ratio.  The current study used information of 14 banks (non-specialized banks) over the period 2009 - 2013. It examined the relationships among inefficiency ratio, profitability (ROE), size, equity to assets ratio, deposits to assets ratio, investments and joint ventures to assets ratio, non-interest income to total income ratio and non-performing loans ratio utilizing EGLS panel data method.
The findings indicate positive relationships among inefficiency ratio, investments and joint ventures to assets ratio, non-interest income to total income ratio and non-performing loans ratio, and negative significant relationships among size, deposits to assets ratio and non-performing loans ratio.

Keywords

References

منابع
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