چکیده:
Balance sheet itself does not specify and show all the activities that a bank pays.
Because banks can do many swap contracts and obligations, exchange, and commitments
Outside of the balance sheet. To such activities and exchange that will
not appear on the balance sheet, are saying off-balance sheet activities. These
items are usually reported in the notes to the attached financial statements. One of
the reasons for conducting the activities of off-balance sheet by the banks is the
interest rate risk coverage. However, the use of these tools for risk management
leads to multiple different sorts of risk and that the overall judgment about the
outcome of the risk management of the off-of-balance sheet activities has met
with ambiguity. The present research has examined the relationship between risk
and the items of off-balance sheet under the hypothesis of Adverse selection with
the use of the Iran's nine commercial bank data. The results show that this hypothesis
isn’t able to respond off- balance sheet activities behaviour in Iran.
خلاصه ماشینی:
The analysis of the existence of the hypothesis of adverse selection on the relationship between off-balance sheet items and the bank's risk Ahmad Sarlak a, , FatemehJoharia aDepartment of Economic, Arak Branch, Islamic Azad University, Arak, Iran.
The present research has examined the relationship between risk and the items of off-balance sheet under the hypothesis of Adverse selection with the use of the Iran's nine commercial bank data.
3. Compound Relation In general, reasons for the growth of off-balance sheet activities can be summarized and can be out- lined as follows: Reducing the profit margins of traditional banking methods Banks interest in saving the capital and avoiding the requirements of the reserve Deregulation Increasing the fluctuation of securities price that result in increase in demands for risk management.
The issue of adverse selection between the banks and the counterparts on the market activities of the out-of-balance sheet (View the image of this page) No deal will happen, if investors consider investment risky.
Secondly, as a result of being probable of off-of-balance sheet activities, when the Publisher, show that banks is suggesting low probability of bankruptcy and chances of bankruptcy and thus do not take low risk potential claims, in this case investors will rate more valuable OBS items.
This is an incentive for banks to use assets with high liquidity and low risk on their balance sheet, so adverse selection hypothesis predicts that the balance sheet has a positive relationship with credit risk and liquidity but its relationship with the general level of risk and the risk of failure is a negative.