Asset markets and real efficiency of facilities granted by banking network: an application of Simultaneous Equations Approach
Subject Areas : Agriculture Marketing and CommercializationAli Daneshzad 1 , Ehsan Namazi Zadeh 2 , Hamid Kakaei 3 , Marjan Daman Keshideh 4
1 - MA, Department of Economics, Central Tehran Branch, Islamic Azad University, Tehran, Iran
2 - MA, Department of Industries Engineering, South Tehran Branch, Islamic Azad University Tehran, Tehran, Iran
3 - Ph.D, Department of Econometrics, Central Tehran Branch, Islamic Azad University, Tehran, Iran
4 - Assistant Professor, Department of Economics, Central Tehran Branch, Islamic Azad University, Tehran, Iran
Keywords: Stock Market Index, Oil Incomes, Exchange Rate, 3SLS Model.,
Abstract :
This study investigates the impact of exchange rate, stock index, and oil incomes on the efficiency of facilities or loans granted by the banking network during 2005:1-2022:2 in quarter intervals using the three-stage least squares (3SLS) model. The results show that the efficiency of the loans granted by the banking network has been descending in stimulating the real sector of the economy, and this decline has been more during sanctions. Moreover, the results indicate that an increase in the exchange rate negatively and significantly impacts the efficiency of granted loans. In contrast, the increase in the oil income has a positive and significant effect on this variable. On the other hand, improvement in the efficiency of granted loans and lagged stock index leads to a reduction in exchange rate. Also, improved efficiency of lending and exchange rate has a positive and significant impact with a lag on the stock index in the country. Therefore, the currency reserve fund plays a significant role in the short-term in the country, which can be a factor for exchange rate control preventing its effects on the loans' efficiency and other parallel markets. On the other hand, Iran's economic dependence on oil incomes must be decreased so as not to face problems when any change occurs in the economy and asset markets because these changes may affect the efficiency of loans granted by the banking network.
Kim KH. (2003). "Dollar exchange rate and stock price: evidence from multivariate cointegration and error correction model". Review of Financial economics, 12(3): 301-313.
Beck T. & Demirgüç-Kunt A. & Levine R. (2006). "Bank concentration, competition, and crises: First results". Journal of Banking & Finance, 30(5): 1581-1603.
Feizi K. & Mehrani H. & Vazifehdust H. & Sadeh E. (2024). Conceptualization and Design of a Digital Content Marketing Model Using Structural Equation Approach, Agriculture Marketing and Commercialization, 8(1): 51-69.
Ramezani F. & Shokravi S. & Bagheri A. (2024). Investigating the Impact of Natural Resource Rent and Political Stability on the Environmental Degradation Index in Selected Developing Countries Using a Combined Data Approach, 8(1): 93-108.
Koochakzadeh A. & Jalaee SA. (2014). Effect of exchange rate uncertainty on economic growth in Iran, Economic Growth and Development Research, 16(4): 11-20.
Aghaeipour Noei MH. & Shokravi S. & Khoshsima R. (2023). Identifying possible and superior marketing strategies of Arad Rastin Adib Dana Company and testing the effectiveness of superior strategies on its profitability based on the Quantitative Strategic Planning Matrix (QSPM) approach, 7(2): 43-60.
Berument H. & Kutan AM. (2007). The stock market channel of monetary policy in emerging markets: evidence from the Istanbul Stock Exchange. Scientific journal of administrative development, 5(1): 117-144.
Khademi Noshabadi SM. & Omidi Najafabadi M. & Mirdamadi M. (2023). Factors affecting the use of climate-smart agricultural technologies among wheat farmers in Alborz province with a planned behavior approach, 7(2): 156-170.
Todirica D. & Thræn OM. & La Cour LF. (2009). The effect of house prices on private consumption in Denmark. Copenhagen Business School.
Klock M. & Baum CF. & Thies CF. (1996). Tobin's Q, intangible capital, and financial policy. Journal of Economics and Business, 48(4): 387-400.
Blanchard OJ. & Wyplosz C. (1981). An empirical structural model of aggregate demand. Journal of Monetary Economics, 7(1): 1-28.
Dindar Rostami M. & Shirin Bakhsh Masooleh S. & Afshari Z. (2018). Effect of financial policy shocks on the cyclic and structural budget balance of OPEC countries, Journal of Economic Modeling, 4(1): 119-142.
Zarei Z. (2018). Budget sustainability and financial stability, Journal of Economic News, 152(1): 41-47.
Touny MA. & Shehab MA. (2015). Macroeconomic determinants of non-performing loans: An empirical study of some Arab countries. American Journal of Economics and Business Administration, 7(1): 33-40.
Partovi E. & Matousek R. (2019). Bank efficiency and non-performing loans: Evidence from Turkey. Research in International Business and Finance, 48(1): 287-309.
Radivojević N. & Cvijanović D. & Sekulic D. & Pavlovic D. & Jovic S. & Maksimović G. (2019). Econometric model of non-performing loans determinants. Physica A: Statistical Mechanics and its Applications, 520(1): 481-488.
Brancaccio E. & Califano A. & Lopreite M. & Moneta A. (2020). Nonperforming loans and competing rules of monetary policy: A statistical identification approach. Structural Change and Economic Dynamics, 53(1): 127-136.
Musa U. & Jun W. (2020). Does inflation targeting cause financial instability?: An empirical test of paradox of credibility hypothesis. The North American Journal of Economics and Finance, 52(1): 101164-70.
Kim H. & Batten JA. & Ryu D. (2020). Financial crisis, bank diversification, and financial stability: OECD countries. International Review of Economics & Finance, 65(1): 94-104.
Shakeri A. & Mohammadi T. & Mirza’I E. (2015). The interaction between non-performing loans and macroeconomic conditions: A Panel Vector Autoregressive Approach, Journal of Economic Research, 60(1): 183-220.
Mohammadi T. & Shakeri A. & Eskandari F. & Karimi D. (2016). The effect of exchange rate volatility on non-performing loans in the banking system of Iran, Journal of Planning and Budgeting, 2(1): 3-24.
Roudari S. & Homayounifar M. & Salimifar M. (2020). The effect of exchange rate and stock index fluctuations on the efficiency of agricultural facilities, Journal of Agricultural Economics & Development, 34(1): 81-96.
Roudari S. & Homayounifar M. & Salimifar M. (2010). The impact of nominal foreign exchange rate fluctuations and non-performing debts of government to banking network: Wavelet Transform Approach, Journal of Monetary and Financial Economy Research, 27(19): 169-190.
Hollingsworth B. & Smith P. (2003). Use of ratios in data envelopment analysis. Applied Economics Letters, 10(11): 733-735.
Abou-Ali H. & Abdelfattah YM. (2013). Integrated paradigm for sustainable development: A panel data study. Economic Modelling, 30(1): 334-342.
Hsu CC. & Wu JY. & Yau R. (2011). Foreign direct investment and business cycle co-movements: The panel data evidence. Journal of Macroeconomics, 33(4): 770-783.
Lashitew AA. & Werker E. (2020). Do natural resources help or hinder development? Resource abundance, dependence, and the role of institutions. Resource and Energy Economics, 61(1): 101183-98.