International Journal of Nonlinear Analysis and Applications

The effect of banking monetary law and capital requirements on lending and financial stability of banks admitted to Tehran Stock Exchange

Document Type : Research Paper

Authors

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

2 Department of Economics, Payam Noor University, Tehran, Iran

Abstract

According to Ball's principles, the most important weakness and shortcoming in the banking sector is the lack of financial resources and lending by banks to other economic sectors. Banks need liquidity to cover fluctuations and expected or unanticipated changes in balance sheet items, as well as to attract new resources for allocation and as a result to earn income. In this regard, in this research, the asymmetric effects of banking monetary law requirements on lending and financial stability of banks admitted to the Tehran Stock Exchange have been investigated. For this purpose, the data of 19 selected banks and financial institutions were used during the period of 2012-2020. The findings of the research showed that the banking monetary law and capital requirements had negative and significant effects on bank lending. It was also observed that the banking monetary law and capital requirements had positive and significant effects on the financial stability of banks. Finally, it was observed that there is a symmetrical convergence relationship between lending power and banking stability with capital requirements and banking monetary law.

Keywords

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International Journal of Nonlinear Analysis and Applications
Volume 16, Issue 3
March 2025
Pages 101-113
  • Receive Date: 05 August 2023
  • Revise Date: 19 December 2023
  • Accept Date: 23 December 2023