The Effect of Banks Entering the Stock Market on Lending Behavior: Evidence from Iranian Stock Market

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Hazeri Yazdi, Farzaneh | 2024

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Type of Document: M.Sc. Thesis
Language: Farsi
Document No: 57539 (44)
University: Sharif University of Technology
Department: Management and Economics
Advisor(s): Ebrahimnejad, Ali
Abstract:
This paper examines the effect of the initial public offering (IPO) of banks in the Tehran Stock Exchange on their lending practices to firms. To this end, panel data from the financial statements of 93 listed firms, along with a database of loan balances of listed companies in the Tehran Stock Exchange, categorized by their respective banks, between 1386 and 1397, were utilized. The main question of this paper is whether the IPO of banks in the stock market affects their decision-making in granting loans and applying essential filters in selecting firms. To answer this question, the ordered logit method was employed. The results of the research show that publicly listed banks are more likely than non-listed banks to grant loans to firms with better performance indicators (such as profitability, efficiency, leverage, and liquidity ratios). Additionally, these banks tend to prefer working with firms that have lower leverage or risk and higher profitability. They also show a greater inclination toward firms with a lower risk of bankruptcy. Overall, the findings suggest that entering the stock market reduces the lending risks for banks
Keywords:
Bank Loan ; Financial Risk Management ; Financing ; Logit Model ; Tehran Stock Exchange ; Finance ; Stock Market

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