Evaluating the banking network lending performance in Basel III

Subject Areas : Monetary Economics

Samaneh Naghizadeh ¹ , Ghodrat alah Emamverdi ^{2 *} , Aliakbar khosravinejad ³ , Teymour Mohammadi ⁴

1 - PhD Student in Economics, Department of Economics, Central Tehran Branch, Islamic Azad University, Tehran, Iran, [e-mail]
2 - Assistant Professor, Department of Economics, Central Tehran Branch, Islamic Azad University,Tehran, Iran, (Corresponding Author), [e-mail]
3 - Associate Professor, Department of Economics, Central Tehran Branch, Islamic Azad University,Tehran, Iran, email: [e-mail]
4 - Associate Professor, Department of Economics, Allameh Tabataba'ii University, Tehran, Iran, email: [e-mail]

Received: 2024-11-12 Accepted : 2025-01-11 Published : 2025-01-11

Keywords: Liquidity Requirements, Capital Requirements, Lending Performance, Difference-in-Difference Approach. GEL Classification: G21, G28, G30.,

Abstract :

This study was aimed to investigate the status of the banking system of Iran, based on the annual financial statements of 16 sample banks, using difference-in-difference (DID) technique originated in the field of econometrics, over the period 2013 – 2021. DID is a quasi-experimental design that makes use of longitudinal data from treatment and control groups to obtain an appropriate counterfactual to estimate a causal effect. By examining the difference between the performance of the treatment group and the control group before and after the implementation of the policy, results showed that compliance with capital requirements by the country's banks improves the performance of banks in lending and also has a positive effect on the ratio of non-performing loans. Also by examining the difference between the treatment group and the control group before and after the implementation of the The requirement for sustainable investment policy, it was found that this requirement improves the performance of banks in the amount of lending. Based on the results, it is suggested that the emphasis of the Central Bank on the implementation of Basel III requirements and the follow-up and supervision of their implementation in the banking system should be among the priorities of the Central Bank.

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