Effect of portfolio diversification and performance of selected private banks in Iran

Subject Areas : Computational economics

nasrin takaloo ¹ , asma shiri ² , Ali Akbar Gholizadeh ³

1 - Master of Islamic Banking, Bu Ali Sina University
2 - Master of Energy Economics, Faculty of Economics and Social Sciences Bu Ali Sina University of Hamadan
3 - Faculty Member of Bu Ali Sina

Received: 2023-07-18 Accepted : 2023-09-26 Published : 2023-08-23

Keywords: performance, portfolio diversity, private bank,

Abstract :

The relationship between portfolio diversification (stock portfolio) and performance in private banks is a question that private banks always face and is one of the daily and important issues that they must answer. The purpose of this research is to examine the relationship between portfolio diversity (stock portfolio) and the performance of selected private banks in Iran (including: Pasargad Banks, Karabharani Banks, Ekhtaz Novin Banks, Sina Banks and Parsian Banks). For the time period under study, it is 2016-2018. This research is applied in terms of research strategy, descriptive in terms of purpose, and comparative in terms of research approach. Also, this research is correlational in terms of investigation, organizational in terms of analysis, and cross-sectional in terms of time horizon. In this research, the generalized econometric method of moments (GMM) is used to estimate the models for analysis using Stata software. The results of the model estimation showed that there is a positive and significant relationship between bank-specific variables (asset return rate, interest rate). On the other hand, the results showed that there is no significant relationship between the amount of loans granted to the total assets of banks and the annual growth rate of assets. Also, based on the results of the research, the rate of return on the rights of the shareholders, the value of the shares to the total assets has a negative and significant effect on the diversification of the portfolio.