The effects of shadow banking on banking risk based on capital adequacy approach

Nohtani, Nima; Sharifi Renani, Hossein; Daei-Karimzadeh, Saeed

doi:10.22051/jaasci.2023.40888.1720

The effects of shadow banking on banking risk based on capital adequacy approach

Document Type : Research Paper

Authors

¹ Department of Economics, Isfahan (Khorasgan) Branch, Islamic Azad University, Isfahan, Iran.,

² Associate Professor of Economics, Isfahan (Khorasgan) Branch, Islamic Azad University, Isfahan, Iran.

³ Associate Professor of Economics, Isfahan (Khorasgan) Branch, Islamic Azad University, Isfahan,

10.22051/jaasci.2023.40888.1720

Abstract

Objective: Shadow banking is a type of financial, credit and liquidity intermediary that has attracted a lot of liquidity with little capital by strengthening financial leverage, which ultimately causes a capital market crisis. There are two views on the relationship between shadow banking and banking risk: shadow banking reduces banks' risk or shadow banking increases bank risk. The purpose of this research is to investigate the effects of shadow banking on banking risk, focusing on the perspective of capital adequacy in Iran.
Method: In this study, data from 23 investment funds, 23 insurance companies and 19 banks and credit financial institutions in the period from 2013 to 2018 have been used. ARDL method was also used for data analysis.
Findings:The results of this study show that the capital adequacy ratio index for shadow banking has an effect on banks' risk appetite and specific banking characteristics and macroeconomic indicators also affect this issue.
Conclusion: The findings of the research showed that the indicators related to shadow banking are reliable banks in Iran. Other findings of the research showed that the bank's banking index, loans, compared to deposits and the independence of the board of directors are meaningful on the bank's risk-taking in Iran.
Knowledge enhancement: According to the few researches that have been done in this field, this research shows the existence of a theoretical relationship between economic and banking indicators from a theoretical point of view.

Keywords

Main Subjects

capital market

References

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