Environmental Niche Capacity and Peer Effect in Funding Liquidity Risk of Banks

Subject Areas : Journal of Investment Knowledge

Tayebe Bakhtiarian ¹ , Gholamhossein Asadi ² , Hossein Abdo Tabrizi ³ , Teymor Mohammadi ⁴

1 - PhD student at management and accounting of Shahid Beheshti University
2 - Associate Professor Faculty of Management and Accounting of Shahid Beheshti University
3 - Assistant Professor Faculty of Sharif University of Technology
4 - Associate Professor Faculty of Economics College of Allame Tabataba'i University

Received: 2020-04-09 Accepted : 2020-07-25 Published : 2023-03-21

Keywords: organizational ecology, funding liquidity risk, peer effects, environmental niche capacity, Banking Industry,

Abstract :

Peer effects is a pervasive phenomenon in a business world and several theories have been proposed to explain that. Since this phenomenon can have different positive or negative consequences in different domains, therefore, in this paper using information and competition based theories and Organizational ecology theory and By defining an index called environmental niche capacity, the relationship between the index and peer influence has been investigated in banking industry of Iran in order to help to form macro prudential policy to control peer effects as a systemic risk factor in that industry. The research sample includes all active banks of Iran from 2002 to 2016 and the models used are linear regression model based on Manski's approach with unbalanced micro-panel data and two stage least squares method to estimate peer effects coefficient and linear regression model with time series data to evaluate relation between peer effects and environmental niche capacity index and also concentration and uncertainty index. The evidences shows that the correlation of niche index is significant both during boom and bust, but during recession the coefficient is increased by approximately 2/1 times, indicating the importance of liquidity management by central bank to control peer effects systemic factor and crisis formation in the banking system.

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