چکیده:
For Iran as an oil exporter country, heavy reliance on the extractive sector for generating fiscal revenues and export earnings translates into increased vulnerabilities to oil price shocks. The structure of the economic policy, and the banking systems make macroprudential policy a particular relevant tool for Iran. The capital adequacy is a macro prudential instrument used to maintain the stability of Iranian financial system by considering the bank capital condition. This paper examines the impact of capital adequacy on financing behavior in Iranian banking system. The paper uses generalized method of moment estimation (GMM) technique and by employing bank-level data for both public and private banks covering the period 2003-2016, we analyze the reaction of bank financing behavior toward capital adequacy policy. The findings indicate that capital adequacy ratio is observed to be effective in curtailing financing behavior of banking institutions. Furthermore, the results reveal that the impact of capital adequacy in managing credit expansion of private banks was greater than public banks.
خلاصه ماشینی:
Capital Adequacy Ratio and Financing Behavior in Iran’s Banking System For Iran as an oil exporter country, heavy reliance on the extractive sector to generate fiscal revenues from export earnings, means increased vulnerabilities to oil price shocks.
Given the vulnerability of Iran to credit and asset price cycles, the limited monetary policy, macroprudential instruments can also have an important role to limit systemic risk and restrict the pro-cyclical behavior of banks in the financial system.
The objective of this research is to compare the effectiveness (the pro-cyclical behavior) of the Capital Adequacy Ratio (CAR) in public and private banks in Iran.
Khoshnoud and Esfandiari (2014) have studied the effect of capital adequacy on bank lending channel using panel data of public and private banks in Iran for the period of 1386:1- 1392:2.
The results confirm the effectiveness of adequacy ratio on bank's capital lending decisions in both public and private banks.
1 Descriptive Statistics Table 2 exhibits descriptive statistics of bank financing, CAR, and bank-specific characteristics, such as size and liquidity ratio for both public and private banks.
As table 4 shows, the impact of changes on Capital Adequacy Ratio (CAR) on financing of public bank is significant and negative.
5 Conclusions This paper examines the impact of the Capital Adequacy Ratio (CAR) as a macroprudential on financing behavior of both public and private banks by using a dynamic GMM panel model, for the period of 2003–2016.