The purpose of this article is to investigate the non-linear effect of the central bank's intervention index, taking into account credit risk, on the profitability of commercial banks in the country's banking network. For this purpose, the panel model with a threshold a
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The purpose of this article is to investigate the non-linear effect of the central bank's intervention index, taking into account credit risk, on the profitability of commercial banks in the country's banking network. For this purpose, the panel model with a threshold approach (PSTR) has been used based on the annual data of banks admitted to the Tehran Stock Exchange during the years 2010 to 2019. Based on the estimation results of the model in the linear part for banks admitted to the stock exchange in the first, second and third models; The growth of banking facilities, the size of the bank and the intervention of the central bank have a significant effect on profitability. Due to the confirmation of the nonlinearity of the model by the test (LM), the analysis of this part of the model has more validity. The estimation results of the non-linear part of the model (second regime) also show the existence of a significant effect of the variables; The growth of banking facilities, bank size, credit risk and central bank intervention in all three models have an effect on banks' profitability. So that for one percent increase in the growth of banking facilities, respectively; The rate of return on assets in the first model is -0.02, the rate of return on equity in the second model is -0.03, and the net interest income in the third model decreases and increases by 0.07. The increase in the intervention of the central bank has also led to a decrease in the profitability of commercial banks. Therefore, it is suggested that commercial banks act through measures such as reviewing and correcting the inhibiting factors and the speed of action in collecting existing receivables in order to reduce non-current receivables, merging the unprofitable bank with the profitable and successful bank, etc.
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