Investigating the Eeffects of Factors on Capital Adequacy Ratio in the Islamic Banking System of Iran and Malaysia by Threshold Regression Approach

Mehrabians, Azadeh; Bahrami Zonooz, Parima; Seifipour, Roya; Aminrashti, Narciss

doi:10.52547/jemr.12.45.123

Volume 12, Issue 45 (11-2021) jemr 2021, 12(45): 123-161 | Back to browse issues page

‎ 10.52547/jemr.12.45.123

‎ 20.1001.1.22286454.1400.12.45.4.3

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Mehrabians A, Bahrami Zonooz P, Seifipour R, Aminrashti N. Investigating the Eeffects of Factors on Capital Adequacy Ratio in the Islamic Banking System of Iran and Malaysia by Threshold Regression Approach. jemr 2021; 12 (45) : 4
URL: http://jemr.khu.ac.ir/article-1-2225-en.html

Investigating the Eeffects of Factors on Capital Adequacy Ratio in the Islamic Banking System of Iran and Malaysia by Threshold Regression Approach

Azadeh Mehrabians ^*

¹, Parima Bahrami Zonooz²

, Roya Seifipour³

, Narciss Aminrashti³

1- Islamic Azad University, Central Tehran Branch , mehrabianazadeh@yahoo.com
2- Bank Iran Zamin
3- Islamic Azad University, Central Tehran Branch

Abstract: (3373 Views)

Capital adequacy ratio is one of the most important indicators in analyzing the situation of banks in order to manage banks against risks such as bankruptcy and their inability to meet obligations. This controls the risk management of banks. The aim of this paper is to investigate the effect of banking variables on the capital adequacy ratio (CAR) in private banks in Iran during the period 2011-2018 and in Malaysia quarterly during the period 2012:01-2019:04 by Threshold Auto regression Method. The results showed that the CAR in the low regime with four lags had a negative effect and in the high regime had a direct effect on the CAR of Iranian banks. But it did not have a significant impact on the Malaysian banking system. The share of bank deposits in Iran in both regimes has a negative effect on the CAR. But it had a direct effect on the Malaysian banking system in the high regime. The size of the bank in the low regime had a direct effect on the CAR of private Iranian banks. But in Malaysia, in both regimes, it had a direct impact on the capital adequacy ratio. The share of credits in both regimes had a direct impact on the CAR in Iran. But in the Malaysian banking system in both regimes had a negative impact on the CAR. Liquidity in the low regime has a negative effect on the CAR in private Iranian banks. But in the high regime did not have a significant effect. While in the high regime, liquidity has a direct and significant effect on the CAR in the banking system of Malaysia. Returns of assets in the low regime do not have a significant effect on the CAR of Iranian banks. But returns of assets in the low regime have a direct and significant effect and in the high regime have a negative effect on the CAR in the Malaysian banking system. Financial leverage in the low regime does not have a significant effect on the CAR of Iranian banks, but in the Malaysian banking system in the low regime has a negative effect and in the high regime has a direct effect.

Article number: 4

Keywords: Capital Adequacy, Bank Size, Credits, Liquidity, Financial Leverage, Threshold Auto Regression

Full-Text [PDF 525 kb] (1810 Downloads)

Type of Study: Applicable | Subject: پولی و مالی
Received: 2021/12/27 | Accepted: 2022/05/13 | Published: 2022/11/6

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