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Studying the Effect of Connection with Private Banks on Companies in Iran

Zakizadeh, Ali | 2023

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  1. Type of Document: M.Sc. Thesis
  2. Language: Farsi
  3. Document No: 56416 (44)
  4. University: Sharif University of Technology
  5. Department: Electrical Engineering
  6. Advisor(s): Ebrahimnejad, Ali
  7. Abstract:
  8. This research examines the effect of the relationship between firms and private banks on the behavior and performance of firms. For this purpose, the data of the relationship of non-financial listed firms with private banks, as well as the available data from the characteristics of these firms, have been used. The dataset of this research is an unbalanced panel of firms between 2004 and 2014, in which the characteristics of the firm and the connection or non-connection of the firm with private banks are specified in each year. In the following, with the help of these data and the method of propensity score matching and difference in difference, the main question of the research has been investigated. The findings of this research show that the relationship between firms and private banks leads to an increase in the amount of bank credits granted to firms and as a result, credit expansion for them. However, there was no evidence of a significant effect of the connection with private banks on the real variables of the firm such as investment and sales indicators, profitability and employment, as well as financial variables such as the interest coverage ratio and the ratio of long-term to short-term debt. Also, the data shows that the average interest rate of firm loans has increased by 2.25% as a result of relation with private banks. Therefore, the results show that in Iran, credit expansion for the firm does not necessarily lead to an impact on the real variables of the firm. Perhaps one of the reasons for this is the subsidized role of banking facilities in Iran according to previous researches. Also, the increase in the average interest rate of company loans due to the relationship with private banks can be analyzed considering the more economical view of these banks compared to state banks
  9. Keywords:
  10. Real Variables ; Difference-in-Difference Method ; Private Banks ; Bank Credits ; Propensity Score Matching ; Credit Expansion

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