Investigating the impact of risk incentives on the strength of the market value of banks' shares admitted to the stock exchange

Subject Areas : Computational economics

fatemeh Sehbaradaran ¹ , Reza Rahimi ² , Hadi Mohamadi mohamadi ³

1 - Master of economics
2 - Faculty member of Islamic Azad University, Central Tehran Branch, Faculty of Economics and Accounting
3 - Member of the Faculty of Islamic Azad University, Tehran Branch, Faculty of Economics and Accounting

Received: 2023-02-07 Accepted : 2023-05-23 Published : 2023-05-22

Keywords: Tehran Stock Exchange, Panel Data, Market Value, Risk Incentives, Accepted Banks,

Abstract :

Some market participants believe that with the increase in market volatility and the decrease in the number of small shareholders, a type of stability will be created in the decision-making process of bank management that only considers the interests of majority shareholders. This disrupts market activities and reduces the cash asset reserves of banks based on optimal risk incentives. The aim of this study is to investigate the effect of risk incentives on the market value of banks. This research is a library-based analytical study based on panel data analysis. Financial information from 10 accepted banks in Tehran Stock Exchange during the period from 2016 to 2021 was examined. The results showed that liquidity fluctuations as one of the risk incentives had a positive and significant effect on the market value of banks during the studied period. Financial performance fluctuations also had a positive and significant effect on the market value of banks.