Examining the Relationship Between Stock Market Volatility and Bank Performance and Profitability: A Case Study of Banks Listed on the Tehran Stock Exchange (2019–2024)

In the contemporary financial landscape, banks remain pivotal to Iran's economy as key players in the capital market. This study investigates the relationship between stock market volatility and the performance and profitability of banks listed on the Tehran Stock Exchange (TSE) from 2019 to 2024. The statistical population includes banks with a consistent presence on the TSE during this period, namely Karafarin Bank, Parsian Bank, Eghtesad Novin Bank, Sina Bank, Bank Mellat, and Bank Saderat Iran. Data were sourced from stock market indicators, TSE financial reports, "Rahavard Novin" software, the www.Rdis.ir website, and banks’ financial statements and notes, collected via a documentary library method. Panel regression analysis, conducted using EViews software, was employed to assess the relationships between dependent variables (bank performance and profitability metrics) and independent variables, including stock market volatility, banking competition, market development, and macroeconomic factors. The results indicate that stock market volatility significantly impacts Economic Return on Equity (EROE) and Net Interest Margin (NIM). Banking competition significantly affects NIM, while stock market development influences NIM and Economic Value Added (EVA). Additionally, interest rates impact both NIM and EVA, whereas inflation primarily affects NIM. These findings highlight the interplay between market dynamics and bank performance, with implications for financial stability and digital transformation in the banking sector.