The Study of Relationship between interest rate changes with stock returns and profitability of financial institutions in Tehran Stock Exchange

Subject Areas : Financial Knowledge of Securities Analysis

Received: 2010-12-06 Accepted : 2011-04-14 Published : 2011-03-21

Keywords: financial institutions- intere,

Abstract :

In this study We examine the relationship between interest rates changes, yields and profitability of financial institutions spent in Tehran Stock Exchange To calculate the stock returns of financial institutions to examine the behavior of stock prices of these institutions during 1991 to 2009 and measure the profitability of financial institutions through the extraction of financial statements of institutions under conditions of investigation, to calculate the return on assets ratio(ROA) and return on equity(ROE) and ultimately the profitability of these companies over We spent period 2003 to 2009. To study the effects of nominal interest rates and real interest rates on financial returns, separate regressions with the total return cash index to the financial sector is estimated. regression results showed that the nominal interest rate variable impact on stock returns and financial institutions are among the changes in interest rates and stock returns are inversely financial institutions also that between the real interest rate changes and stock returns of financial institutions, does not exist significant inverse relationship. Results of research shows in Tehran Stock Exchange Market between interest rate changes inversely with the profitability of financial institutions there.