The determinants of banking profitability in Iran

Abstract

The banking industry is undoubtedly one of the most important financial intermediary of any economy. Each nation's economic growth depends on the services provided by the banking sector. In modern banking, many factors affect the profitability of this industry, finding and determining the impact and type of these components on the profitability of the bank, in addition to having a role in efficiency and effectiveness of the system, can result in the growth and prosperity of the economy. Accordingly, this paper using the data of the 18 banks of the country, using the GLS method, examine the factors affecting the profitability of Iranian banks during the period 2006-2015. The results indicate a positive and significant effect of economic growth on profitability in the banking industry in Iran. In addition, the ratio of capital and deposit growth to the profitability of banks in the country is positive.