:: Volume 11, Issue 4 (Fall 2016) ::
J. Mon. Ec. 2016, 11(4): 443-466 Back to browse issues page
Relationship between Structure and Performance in the Banking Industry of Iran
Akbar Najahi 1, Yeghaneh Mousavi Jahromi2, Farhad Khodadadkashi2, Gholamali Haji1
1- Department of Economics, Islamic Azad University, Arak Branch
2- Department of Economics, Payam-e Noor University
Abstract:   (1815 Views)

The purpose of this study is to investigate the causal relationship between the structure and performance in the banking industry of Iran. In doing so, the data and information of public and private banks from 1996 to 2015 is examined using Toda-Yamamoto causality test (TY) and Autoregressive Distributed Lag (ARDL) approach. Herfindahl-Hirschman index (HHI) (the degree of market concentration) trend shows that over the last two decades, the degree of concentration has reduced. In other words, the structure of banking industry has moved away from monopoly conditions towards competitive markets. The degree of profitability and the ratio of net return on assets (ROA) are used for the performance of banking industry. According to the results, the banks' profitability rate has been increasing over the years under study. The results of Toda-Yamamoto causality test (TY) and Autoregressive Distributed Lag (ARDL) approach also show that in the banking industry of Iran, both in the short term and long term, there is a one-way causal relationship from performance to structure. In other words, the structuralist theory of the banking industry of Iran is not approved and the Chicago School theory of the causal relationship between performance and structure cannot be rejected.

Keywords: Market Structure, HHI, Performance, ARDL, Toda-Yamamoto Causality Test
Full-Text [PDF 345 kb]   (1081 Downloads)    
Type of Study: Original Research - Theoric | Subject: Economics
Received: 25 Jun 2018 | Accepted: 4 Sep 2018 | Published: 9 Dec 2018

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Volume 11, Issue 4 (Fall 2016) Back to browse issues page