Test of the effect of speculative price bubble and cost of capital on the relative net profit of the group of banks and credit institutions listed on the Tehran Stock Exchan

Subject Areas : Agriculture Marketing and Commercialization

Mahdi Rajabi ¹ , Akbar Bagheri ²

1 - Department of Economics, Islamshahr Branch, Islamic Azad university, Islamshahr, Iran
2 - Department of Economics Islamic Azad University, Islamshahr branch, Islamshahr, Iran

Received: 2023-02-01 Accepted : 2023-04-05 Published : 2023-06-01

Keywords: Cost of Capital, Relative Net Profit, Banks and Credit Institutions, Speculative Price Bubb,

Abstract :

The main goal of this research is to test the effect of speculative price bubble and cost of capital on the relative netprofit of the group of banks and credit financial institutions admitted to the Tehran Stock Exchange (30 cases). Tehran'ssecurities during the time period of 2016-2019 are based on the econometric approach of panel data. For this purpose,firstly, while stating the theoretical foundations and background of the research, in the next step, the specification andestimation of the research model was done based on the relevant diagnostic tests, finally using the fixed effects method.The estimation results confirm the positive and significant relationship between the independent variables (real cashdividend in a previous period, which indicates the price bubble of rational speculation in the research model, and thecapital cost variable) on the relative net profit of the selected sample. Thus, the first hypothesis of the research, whichstates that the price bubble of rational speculation has a significant effect on the relative net profit of the group ofbanks and credit institutions admitted to the Tehran Stock Exchange, was confirmed. Also, the second hypothesis,which states that the cost of capital has a significant effect on the relative net profit of the selected sample, wasconfirmed. At the end, suggestions based on the research results have been presented in order to moderate the effectof speculative price bubble and strengthen the effect of capital cost on the relative net profit of the selected sample.

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