Dynamic effects of shadow banking on banking sector instability in Iran (case study: banks and credit financial institutions of Tehran stock exchange
Subject Areas : Financial Economics
Nima Nohtani
1
,
حسین شریفی رنانی
2
,
Saeed Daei-Karimzadeh
3
1 - Department of Economics, Isfahan (Khorasgan) Branch, Islamic Azad University, Isfahan, Iran
2 - دانشیار گروه اقتصاد، دانشگاه ازاد اسلامی، واحد اصفهان (خوراسگان)، اصفهان، ایران
3 - Assistant Professor of Economics, Isfahan (Khorasgan) Branch, Islamic Azad University, Isfahan, Iran
Keywords: Shadow Banking, Banking Sector Instability, Capital market crisis, banks', risk,
Abstract :
Shadow banking is a type of financial, credit and liquidity intermediary that has attracted a lot of liquidity with little capital by strengthening financial levers, which ultimately causes a capital market crisis.We are witnessing the growing trend of shadow banking in Iran. The continuation of this upward trend is also predicted for the coming years so the need to control the relevant activities for the stability of the country's financial market, especially the stability of the banking sector, becomes apparent. This study also evaluates the dynamic effects of shadow banking on the instability of the banking sector in Iran for the period 2012 to 2020. The statistical sample of this research includes 23 investment funds, 23 insurance companies and 19 banks and credit financial institutions active in the Tehran Stock Exchange. The GMM method was used to analyze the relevant data And in order to investigate the effects of shadow banking on banking risk, focusing on the perspective of capital adequacy, a regression model has been used. The research variables are: risk tolerance index, capital adequacy, bank size, ratio of loans to Total bank deposits, ratio of current and short-term deposits to total deposits, economic growth and corporate governance. The results of this study show that shadow banking activities have increased the instability of the banking sector in Iran. Therefore, these results indicate the need to design macro policies based on different types of shadow banking activities and different types of banks to reduce shadow banking activities in Iran.
