The role of effective factors on Net Spread on private and State-owned Commercial Banks in Iran
Subject Areas : Financial Economics
Rafik Nazarian
1
(
Assistant Professor of Economics, Islamic Azad university, Central Tehran branch
)
Amirabbas Hasheminejad
2
(
M.A. in Economic and senior Economist in C.B.I
)
Keywords: GDP, exchange rate, Net spread, Required Reserve, Non Performing Loan (NPL), Liquidity, Herfindah1 – Hirschman Index,
Abstract :
The Spread is generally considered as a sign of efficiency in any Banking system throughout the world. This important indicator is equal to the difference of two ratios which are the revenues from facilities to total facilities of the bank ratio. An increase of this indicator means more cost of raising funds for demanders of funds. But it is, on the contrary, a signal for higher efficiency of banking system. The main objective of this research is to measure the net spread of public banks and appraisal of effects of three groups of banking policy making and aggregate economy variables on net spread changes throughout the years 1377 to 1386.Calculations show that the average net spread of public banks throughout 1377 to 1386 equals 6.161 and from 1382 to 1386. it has fallen to 5.361.The outcomes of econometrics model reveal that the rate of change in most banking financial indications (such as sight deposit to total deposit ratio, non performing loan ratio, legal deposit ratio and non-interest based revenue to total revenue generating asses ratio) exert meaningful but different effects on the rate of change of underlying variable. Although the private banks have been operating since 1381, the positive multiplier of the herfindahl – Hirschman Index or HHI concentration indicator shows that banking industry in Iran has continually been a monopoly of public sector. However the related numeral multiplier implies a gradual change of current structure towards less monopoly.
