The mediating effect of banking system fragility on the relationship between controlling shareholder sensitivity and interest rate divergence

Subject Areas : Financial engineering

simin rajizadeh ¹ , Amirhossein Taebi Noghondari ² , Hadis Zeinali ³

1 - Department of Accounting,, Kerman Branch, Islamic Azad University, Kerman, Iran
2 - Department of Accounting, Kerman Branch, Islamic Azad University, Kerman, Iran
3 - Department of Accounting, Kerman Branch, Islamic Azad University, Kerman, Iran

Received: 2021-06-03 Accepted : 2021-08-02 Published : 2021-12-22

Keywords: interest rate divergence, sensitivity of controlling shareholders, fragility of the banking system,

Abstract :

Banks and credit institutions, as one of the main pillars of financial markets, have special vulnerabilities in this field and make them fragile in the face of crises. Depending on their situation, banks offer different interest rates on interest on deposits and facilities, which leads to interest rate divergence. This study investigates the mediating effect of banking system fragility on the relationship between the sensitivity of controlling shareholders and interest rate divergence in companies listed on the Tehran Stock Exchange. In this study, 31 banks and financial institutions listed on the stock exchange were reviewed annually during the years 2011 to 2020. The results of testing the hypotheses using multivariate regression method show that 1- There is a negative and significant relationship between the sensitivity of controlling stakeholders and interest rate divergence. 2- There is a negative and significant relationship between the sensitivity of controlling shareholders and the fragility of the banking system. 3. There is a negative and significant relationship between the fragility of the banking system and interest rate divergence. 4. The fragility of the banking system explains the relationship between the sensitivity of controlling shareholders and interest rate divergence.