علی ارشدی

Not only in Iran, but throughout the world, banks and banking industry are considered as very important parts of the economy. This study seeks to investigate the impact of the internal characteristics of banks, the structure of the banking industry and the economic situation of Iran on the profitability of the banking system of Iran by exploring the theory of the Structuralism school concerning the impact of structure on profitability. To this end, data relating to 18 private and public banks of Iran during 2003 to 2012 are analyzed by using panel data methods. First, the profitability of the banking system is calculated using relevant indicators; and then, the impact of various internal, structural and environmental factors on bank profitability is evaluated. The results show that internal factors - the amount of capital and the size of the bank - have a positive impact on profitability. Besides, structural factors including market share and concentration are shown to have a positive impact on profitability whereas ownership appears to have no significant impact. Furthermore, inflation and economic cycles – among environmental factors – exhibit a positive impact on profitability. JEL Classifications: C23, D22, L22, L25

The banks’ response to their changes in leverage ratios is examined and evaluated in this paper. This reaction can be interpreted as if the coefficient of total debts to equity (lev1) and total assets to equity (lev2) are positive as anticipated in the banking network of Iran. The paper uses data from 31 Iranian banks’ annual databases during the course of 2006-13 in order to estimate an empirical panel data model of banks’ balance sheet adjustment. We identify the leverage ratio degree to show that both equity and liabilities tend to adjust to move leverage positively without considering the state of the Iranian economy. On the other hand, the index of leverage coefficient conditioned by the state of the economy is negative which replicates that banks tend to experience a negative impact of leverage on the return to equity as a result of cost push due to higher ratio of assets to equity in the bust and inappropriate return on investment. Furthermore, the non-performing loans ratio coefficient is negative and significant which proves that one percent increase in the nonperforming loans has led to a less than one percent decrease in the return on equity ratio as expected, but the total loans to total deposits ratio depicts a negative-significant coefficient which denotes the higher non-performing loans have caused that loans ratio increase will not necessarily give rise to higher returns for the banks. Besides, the leverage ratio (lev2) is positive as expected and banks gain higher returns through higher leverage. However, the leverage measure’s coefficient conditioned by the state of the economy (dummy) is negatively significant owing to cost push from lower return on investment and higher ratio of assets to equity in the bust. JEL Classifications: C23, E32, E44, E51, G21, M20

There are many factors that could have a potential impact on the growth of a firm. In this research, we examined the relationship between the following economic elements: Size of the firm, Research and development expenditure, Advertisement cost, and the growth of Iranian firms of manufacturing industry. For this purpose, four digit ISIC standard data in manufacturing industry sector have been gathered (based on the published data of the Iran Statistics Center during 1997 to 2007). Then, the effects of the size of the firm, research and development and advertisement on the firm growth were tested. Results showed that research and development and advertisement expenditure factors have positive and significant impacts on the firm growth. In contrast, there was not any significant relation between the initial size of the firm and the growth. Based on the findings of this study, the Gibrat law was confirmed. In addition, the direct relation between the behavioral elements and firm performance was verified. JEL classifications: D92, L25, M37