Analysis of central bank policies and supervision tools on financial stability in the Iranian banking system

Asgharzadeh, Ala; Rahbar, Farhad; Mousavi, Mir Hossein

doi:10.22075/ijnaa.2021.25052.2900

Analysis of central bank policies and supervision tools on financial stability in the Iranian banking system

Document Type : Research Paper

Authors

Ala Asgharzadeh ¹

Farhad Rahbar ²

Mir Hossein Mousavi ³

¹ Faculty of Management and Accounting, Qazvin Branch, Islamic Azad University, Qazvin, Iran

² Faculty of Economics, Tehran University, Tehran, Iran

³ Faculty of Social and Economics, Al-Zahra University, Tehran, Iran

10.22075/ijnaa.2021.25052.2900

Abstract

The purpose of this article is to analyze the policies and regulatory tools of the Central Bank on financial stability in the Iranian banking system . The method of analysis is descriptive - survey . Data were collected through interviews with experts . The validity and reliability of the research tool were confirmed by marketing professors and experts . Data analysis - using software Lisrel Done . Seven main influential factors from the perspective of experts, which include; Ratio of non-current receivables to total payment facilities (NP) , Cash reserves in assets - bank (CR) , Capital adequacy (AC) , The real exchange rate (RER) , Liquidity (LY) , Leverage (DA) , Atbardakhly paid by banks to the private sector - and (DCP) Was agreed upon by them . Test results KMO That sufficient sample - properly selected . Bartlett's test of sphericity also at the level of 99 percent, which shows a significant correlation - in the community is not zero . That is, the seven factors studied had a significant impact on the financial stability of the banking system . Also, the results of varimax rotation of seven factors showed that their eigenvalues are higher than one . Products of factor loadings higher than 35/0 are . In order to confirm homogeneity Of items - forming any of the scale in terms of content and infrastructure of the five-factor confirmatory factor analysis on the causes - were carried out . To evaluate the model - factor analysis identified several characteristics fitness There is . In the present article, the ratio of chi-square or chi-square to the ratio of freedom (x 2 / df) Root mean square residue - Display RMR As well as a good fit index GFI And the adjusted value of the fitness index for the degree of freedom AFGIWas used . Results showed that all the characteristic elegance at an acceptable level were significantly - have given - in this letter with the factor structure of this scale is a good fit and statements - this scale are consistent with the underlying structures .

Keywords

Financial Stability

Regulatory Policies and Instruments

Central Bank

[1] R. Akbarian and M. Khordsu, The impact of Islamic banks on financial stability in the globalization process, Economic Knowledge 1(2) (2010).

[2] C.T. Brownlees and R.F. Engle, SRISK: A conditional capital shortfall measure of systemic risk, Rev. Financial Stud. 30(1) (2017) 48–79.

[3] V. Deltuvaite, The concentration–stability relationship in the banking system: An empirical research, Econ. Manag. (2010) 900–909.

[4] Z. Mozaffari, A. Kazerooni and F. Rahimi, The impact of financial structure on economic growth volatility in Iran, Economic Res. 18(1) (2018) 1–31.

[5] H. Sadeghi, M. Khodayari and A. Maroofkhani, 29 Principles of Effective Banking Supervision, Banking Studies and Regulations Department of the Central Bank, 2012.

[6] H. Samanipour, T. Mohammadi, A. Shakeri and M. Taqwa, The prerequisites of macro-prudential supervision policy and its impacts on the stability of the Iranian banking system, Quart. J. Finan. Econom. 14(52) (2020) 1–26.

[7] A. Sere-Ejembi, I.S. Udom, A. Salihu, N.V. Atoi and B.N. Yabba, Developing banking system stability index for Nigeria, CBN J. Appl. Stat. 5(1) (2017) 49–77.

[8] M. Shahcheraghi and S. Arbabian, Investigating the relationship between centralization and financial stability in the Iranian banking system, The First National Conf. Develop. Monetary and Banking Manag. (2013).

[9] G. Soros, Keynote address, IIF Spring Membership Meeting, Vienna, 2018.

[10] F. Storbel, Bank insolvency risk and different approaches to aggregate z – score measures: A note, Appl. Econom. Lett. 18(16) (2016) 1541–1543.

[11] M. Taghavi, A. Ahmadian and M. Kianvand, An analysis of the impact of corporate governance on the stability of the banking system of developing countries with emphasis on the ownership index of banks, Finan. Knowledge Securities Anal. 6(19) (2013) 45–66.