Presenting a model of the relationship between monetary policies, capital structure and banks' risk-taking

Subject Areas : Financial Accounting

Ayub Tabani ¹ ( Department of Accounting, Qeshm Branch, Islamic Azad University, Qeshm, Iran )
Hossein Badiei ² ( Department of Accounting, Faculty of Economics and Accounting, South Tehran Branch, Islamic Azad University, Tehran, Iran )
Saeed Moradpour ³ ( Department of Accounting and Financial Management, Faculty of Humanities, Bandar Abbas Branch, Islamic Azad University, Bandar Abbas, Iran )
Mohammad Hossein Ranjbar ⁴ ( Department of Accounting and Financial Management, Faculty of Humanities, Bandar Abbas Branch, Islamic Azad University, Bandar Abbas, Iran )

Received: 2022-11-15 Accepted : 2023-01-11 Published : 2023-12-01

Keywords: Legal Reserve Rate, Risk-taking, Debt, Monetary Policies, Capital Structure,

Abstract :

The main objective of this study is to investigate the relationship between monetary policies, capital structure and risk-taking of listed banks in Tehran Stock Exchange. In this study, to measure the monetary policies, the indicator of legal reserve rate have been used. The sample consists of 21 banks listed in Tehran Stock Exchange in the period from 2012 to 2018. In this study, the data were extracted from the Rahavard Novin 3 software and then classified by Excel software, and after calculating the variables, finally, through Eviews10 software, the multivariable regression model and panel data was used to test the hypotheses. The results showed that there is significant negative relationship between monetary policies and banks' risk-taking with in 95% confidence level. In addition, other findings indicated existence of a significant positive relationship between monetary policies and bank capital structure. However, the research results show that there is no significant relationship between bank capital structure and banks' risk-taking.

References:

[1] Pakizeh, K., Logical, K., Nobakht, V., Investigating the effect of ownership concentration on the risk-taking of private commercial banks in Iran. Monetary and Banking Research Quarterly, ninth year, 2015; 27: 109-130.

[2] Haj Mousavi, S., Mahmoudzadeh, M., Adibpour, M., Investigating the effect of monetary policies on banks' risk-taking, a cross-country study. Scientific quarterly journal of economics and urban management, 2021; 9(4): 55-75.

[3] Dehgandhanavi, M. A., Moharmoghli, O., Bye, M., Determinants of banks' risk-taking in Iran with an emphasis on ownership structure. Financial Research, Faculty of Management, University of Tehran, 2016; 19(1): 61-80.

[4] Rahmani, T., Ahmadian, A., Kianvand, M., An analysis on the relationship between monetary policy and risk-taking of the Iranian banking network. Financial-Banking Research Quarterly, 2015; 9(29): 425-405.

[5] Sadat Hosseini, N., The relationship between opportunity cost, bank risk-taking and stock price with dividend payout ratio. Master's thesis in the field of accounting, Shahid Beheshti University, Faculty of Management and Accounting, 2014.

[6] Sari, M. A., Nouri, M., The effect of ownership structure and capital adequacy legal requirements on the risk-taking of banks admitted to the Tehran Stock Exchange. Accounting and Management Perspectives, 1401, 5(58), 26-46.

[7] Soltaninaseb, A., Investigating the impact of choosing an audit firm on the bank's risk-taking. Master's thesis in the field of accounting, Payam Institute of Higher Education - Golpayegan. 2018.

[8] Sharifinia, Hossein; Momeni Vasalian, Houshang; Main Dakhi, Alireza; skirted, Marjan; Afshari Rad, Majid. Evaluating the impact of competitive power and monetary policy on asset returns in Iranian banks (structural patterns approach). Quarterly Journal of Financial Economics, 2019; 14(51): 1-28.

[9] Pushari, M., Investigating the effect of ownership structure on the risk-taking behavior of private and state-owned banks in Iran (dynamic panel data approach), Monetary and Banking Research Quarterly, 2016; 10 (32): 225-199.

[10] Mansoorfar, Gh., Ghayor, F., Rastiazar, Y., Investigating the relationship between risk-taking and banks' performance (case study: National Bank branches of West Azarbaijan province). Management and Development Process, 2012; 26(2)-l84: 160-141.

[11] Nikbakht, M. R., and Taheri, Z., Investigating the relationship between corporate governance mechanisms and systematic risk. Accounting and auditing studies, 2013; 21(1): 109-126.

[12] Adrian, T., Shin, H. S., Money, Liquidity and Monetary Policy. American Economic Review. Papers and Proceedings, 2009; 99(2): 600–605.

[13] Ashraf, B.N., Zheng, C., Arshad, S., Effects of National Culture on Bank Risk-taking Behavior, Research in International Business and Finance, 2016), doi:10.1016/j.ribaf.2016.01.015

[14] Boateng, A., Nguyen, V.H.T., Du, M., Kwabi, F. O., The impact of CEO compensation and excess reserves on bank risk-taking: the moderating role of monetary policy. 2022; 62:1575–1598. doi:10.1007/s00181-021-02086-4

[15] Bukair, A.A.A., Factors influencing Islamic banks’ capital structure in developing economies. Journal of Islamic Accounting and Business Research, 2019; 10(1):2-20. doi: 10.1108/JIABR-02-2014-0008

[16] Calomiris, C. W., & Mason, J. R., Consequences of bank distress during the Great Depression. American Economic Review, 2003; 937-947

[17] Dong, Y., Meng, C., Firth, M. & Hou, W., Ownership structure and risktaking: Comparative evidence from private and state-controlled banks in China. International Review of Financial Analysis, 2014; 36: 120-130.

[18] Hasan, M. M., Cheung, A. (W. K.), Taylor, G., Financial statement comparability and bank risk-taking. Journal of Contemporary Accounting and Economics, 2020; 16(3): 1-22.

[19] Karim, M. A., Hassan, M. K., Hassan, T., & Mohamad, S., Capital adequacy and lending and deposit behaviors of conventional and Islamic banks. Pacific-Basin Finance Journal, 2014; 28: 58- 75.

[20] Kashyap, A. and Stein, J., What do a million observations on banks say about the transmission of monetary policy, The American Economic Review, 2000; 90(3):407-428.

[21] Kim, M., Kristiansen, E. G., Vale, B., Endogenous product differentiation in credit markets: What do borrowers pay for? Journal of Banking & Finance, 2005, 29(3), 681-699.

[22] Lin, H.Y., Farhani, N.H., Koo, M., The Impact of Macroeconomic Factors on Credit Risk in Conventional Banks and Islamic Banks: Evidence from Indonesia, International Journal of Financial Research, 2016; 7(4):105-116.

[23] Rajan, R. G., Has Financial Development Made the World Riskier? Proceedings, Federal Reserve Bank of Kansas City, 2005; August, 313–69.

[24] Sariri, s., Ownership structure and risk-taking behaviour in conventional and Islamic banks: Evidence for MENA countries, Borsa _Istanbul Review,2013; 13; 115-127.