The impact of financing method on performance of private banking industry

Abstract: Banking sector has been one of the fastest growing sectors in Iran due to changes in regulations in private banks. In this paper, we perform a survey on the effect of structure of financing on banking performance. The main question of this survey is whether there is any relationship between different methods of financing private banks in terms of their performances. The survey investigates relationship between changes in debt ratio with return of assets, between changes in time dependent investments and return of assets, between changes in long-term investments and return of assets. Finally, we study whether there is a relationship between changes in ratio of total equities to total assets on return of assets. The proposed study of this paper considers three private banks whose shares have been traded on Tehran Stock Exchange namely Eghtesad Novin, Parsian and Saman. The information has been collected over the period 2006-2010. The results of this study indicates that there are some positive and meaningful relationships between changes in time dependent investments, changes in long-term investments ratio of total equities to total assets with return of assets. However, the study did not find any meaningful relationship between changes in total equities to total assets and return of assets.

How to cite this paper

 Rouhi, A., Tavangar, A & Mohammadi, M. (2013). The impact of financing method on performance of private banking industry.Management Science Letters , 3(2), 547-554.

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