International Journal of Nonlinear Analysis and Applications

The effect of the legal requirements of Ball III Agreement on the lending power and financial stability of the banking sector in Iran by using the system of simultaneous equations

Document Type : Research Paper

Authors

1 Department of Management and Economics, Dehaghan Branch, Islamic Azad University, Dehaghan, Iran

2 Department of Economics, Payame Noor University, Tehran, Iran.

Abstract

With the application of the two-tier capital agreement and the introduction of the three-tier capital agreement, the discussion of the role of banks' capital in the monetary transfer mechanism and banks' lending decisions has become more important. In this regard, in this research, the effect of the legal requirements of the Basel III Agreement on the lending power and financial stability of the banking sector in Iran has been investigated using the system of simultaneous equations. For this purpose, the data of 19 selected banks and financial institutions were used during the period of 2011-2019. The findings of the research showed that the legal requirements of Basel III had negative and significant effects on bank lending. It was also observed that the legal requirements of Basel III had positive and significant effects on the financial stability of banks.

Keywords

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International Journal of Nonlinear Analysis and Applications
Volume 15, Issue 8
August 2024
Pages 41-51
  • Receive Date: 14 February 2023
  • Revise Date: 27 June 2023
  • Accept Date: 09 July 2023