Identifying the relationship between the uncertainty of economic policies and the lack of transparency of banks' income in Iran

Mohammadi, Tahereh; Shirkavand, Saeed; Abbasian, Ezatollah

doi:10.22075/ijnaa.2023.30620.4451

Identifying the relationship between the uncertainty of economic policies and the lack of transparency of banks' income in Iran

Document Type : Research Paper

Authors

Tahereh Mohammadi ¹

Saeed Shirkavand ²

Ezatollah Abbasian ²

¹ Department of Financial Management, Aras International Campus, University of Tehran, Tehran, Iran

² Department of Financial Management, Faculty of Management, University of Tehran, Tehran, Iran

10.22075/ijnaa.2023.30620.4451

Abstract

The purpose of this study is to investigate the relationship between the lack of transparency of banks' income and the uncertainty of economic policies. The statistical population of the research is all banks and banks and credit institutions active in Iran. The research sample includes all the banks admitted to the Tehran Stock Exchange, which were members since 2010 and includes a total of 12 banks. The time period of the research is 2011 to 2021. In the statistical analysis of the research, first the descriptive analysis of the data was done, and then the reliability and distribution of the data were evaluated by performing the stationarity test and the normality test (Jarek-Bera) to estimate the models. In the next step, Limer and Hausman's F test was used to determine the data structure and estimation method. Then it was determined whether the model is linear or non-linear by using Wald's test, and finally, by using the GMM method, the effects of economic policy uncertainty on the lack of transparency of banks' income have been investigated. The results of the research showed that the uncertainty of economic policies depending on the size of banks can have a different effect on the lack of transparency of banks' income. Based on the evidence presented in the research, the relationship between economic uncertainty and lack of income transparency in the investigated banks is negative and significant. Also, the results show that regardless of the level of capital adequacy, the increase in economic uncertainty leads to a decrease in the level of income opacity of banks; However, the intensity of EPU effect on the lack of income transparency in banks with a lower capital adequacy level is greater in terms of absolute value than in banks with a higher capital adequacy level.

Keywords

Economic policy uncertainty

Bank earnings opacity

GMM method

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