Pages: 37-49

Abstract

Different determinants of the banks’ profitability are investigated in the literature extensively and in detail. While less is done regarding the scrutiny of the banking sector profitability in emerging markets. In determining the internal factors affecting the performance of banks in Iran, an analysis using panel data has been carried out over a period of six years 1390 to 1395. In this research, the relationship between the performance of the bank and financial strength in the bank has been investigated in eleven banks accepted in Iranian stock exchanges using panel data regression. The results show that the capital adequacy variable does not have a significant effect on the equity performance index. In the case of the variable ratio of deferred loans, it can be seen that this variable has a negative relationship with the return on equity of the equity holders. Also, the level of liquidity of the bank and the margin of interest to gross income also has a negative relationship. As a result, in order to increase profitability, banks need to take care of the quality of the loans they provide.