Transactions on Data Analysis in Social Science

Transactions on Data Analysis in Social Science

Measuring the impact of the (2011-2012) financial crisis on the relationship between financial ratios and bank profits

Document Type : Original Article

Authors
H. Alidoost 1
M. R. Abbaszadeh 2
M. Jabbari Nooghabi 3
1 Master in Accounting, Department of Accounting, Faculty of Humanities, Mashhad Branch, Islamic Azad University, Mashhad, Iran
2 Associate Professor, Department Of Accounting Faculty of Economics and Administrative Sciences, Ferdowsi University, Mashhad, Iran
3 Assistant Professor, Department Of Statistics, Ferdowsi University, Mashhad-Iran
10.47176/TDASS/2019.33
Abstract
This study aims to investigate the impact of bank financial ratios on performance during periods of financial crisis. Using data from 19 banks listed on the Tehran Stock Exchange between 2009 and 2014, a multivariate regression model was applied to test the proposed research hypotheses. The analysis included descriptive statistics, correlation coefficients among variables, and hypothesis testing to interpret the relationships between financial indicators and bank performance. The selected financial ratios, including liquidity, leverage, asset quality, and profitability measures, were examined to determine their predictive power in crisis conditions. The empirical findings revealed that financial ratios significantly influence bank performance; however, the nature and strength of these effects vary depending on the severity of the crisis. Specifically, the relationship between financial ratios and profitability was found to be moderately mediated by the crisis context, indicating that economic instability alters the traditional performance dynamics of banks. Overall, the results emphasize the importance of robust financial management and ratio monitoring as effective tools for enhancing banking resilience during financial turmoil.
Keywords
Panel Data
Crisis
Financial Ratios
Profit Margin
Performance
[1]      Tan, Y., & Floros, C. (2012). Bank profitability and inflation: The case of China. Journal of Economic Studies, 39(6), 675–696. https://doi.org/10.1108/01443581211274610
[2]      Tan, Y., & Floros, C. (2012). Bank profitability and GDP growth in China: A note. Journal of Chinese Economic and Business Studies, 10(3), 267–273. https://doi.org/10.1080/14765284.2012.703541
[3]      Tan, Y., & Floros, C. (2012). Stock market volatility and bank performance in China. Studies in Economics and Finance, 29(3), 211–228. https://doi.org/10.1108/10867371211246885
[4]      Tan, Y. (2016). The impacts of risk and competition on bank profitability in China. Journal of International Financial Markets, Institutions and Money, 40, 85–110. https://doi.org/10.1016/j.intfin.2015.09.003
[5]      Berger, A. N., Bonime, S. D., Covitz, D. M., & Hancock, D. (2000). Why are bank profits so persistent? The roles of product market competition, informational opacity, and regional/macroeconomic shocks. Journal of Banking & Finance, 24(7), 1203–1235. https://doi.org/10.1016/S0378-4266(99)00124-7
[6]      Taheri Tafreshi, R. (2010). The impact of private banks’ arrival on the structure and functioning of the banking industry in Iran (Master’s thesis). Iranian High Institute for Banking Education.
[7]      Nazarian, R., Farhadipour, M. R., & Faraji, A. (2013). The effect of competition in the banking industry on the effectiveness of monetary policy transmission through the bank lending channel. Ravand Journal, (61–62), 85–104. (in Persian)
[8]      Dietrich, A., & Wanzenried, G. (2011). Determinants of bank profitability before and during the crisis: Evidence from Switzerland. Journal of International Financial Markets, Institutions and Money, 21(3), 307–327. https://doi.org/10.1016/j.intfin.2010.11.002
Transactions on Data Analysis in Social Science
Volume 1, Issue 1
Winter 2019
Pages 33-42

  • Receive Date 18 November 2018
  • Revise Date 15 December 2018
  • Accept Date 15 March 2019