Efficiency Effects on Iranian Banks’Performance and Stability during COVID-19
DOI:
https://doi.org/10.14414/jbb.v15i01.5457Keywords:
COVID-19, Bank Performance, Financial Stability, Efficiency, Market ConcentrationAbstract
This research investigates the impact of market concentration and operational efficiency on the financial performance (Return on Assets and Return on Equity) and financial stability (Z-score) of banks listed on the Tehran Stock Exchange, particularly during the unprecedented COVID-19 pandemicperiod. Utilizing panel data from 10 Iranian banks over the period 2014-2023, three distinct regression models were analyzed with the aforementioned dependent variables and interaction terms with a COVID-19 period dummy variable.Descriptive statistics and inferential tests, including the F-Limer and Hausman tests, were employed to identify the appropriate estimation models. Findings consistently indicate that operational efficiency significantly enhances bank performance and financial stability across all models, both during normal periods and during the pandemic. In contrast, market concentration does not demonstrate a statistically significant effect on performance or stability. DuringtheCOVID-19pandemic, the moderating effect of efficiency remains positive and significant, while concentration continues to show no impact.The models yield substantial explanatory power, with adjusted R-squared values ranging from 43% to 62%, and their F-statistics confirm overall robustness and significance. Durbin-Watson statistics suggest no first-order autocorrelation. These findings underscore the critical role of efficiency in sustaining bank profitability and resilience during economic shocks, providing relevant insights for policymakers and regulators aiming to enhance the banking sector’s preparedness for future crises
References
Adusei, M. (2015). The impact of bank size and funding risk on bank stability. Cogent Economics and Finance, 3 (1), 1–19.
Anginer, D., Bertay, A. C., Cull, R., Demirgüç-Kunt, A., & Mare, D. S. (2019). Bank regulation and supervision ten years after the global fi-nancial crisis. World Bank Policy Research Working Paper, (9044).
Antwi, F., & Kwakye, M. (2022). Modelling the effect of bank perfor-mance on financial stability: Fresh evidence from africa. International Journal of Research in Business and Social Science (2147-4478), 11(7), 143-151.
Bakhouche, A. (2024), “Competition, stability and the efficiency chan-nel in the Tunisian banking system”, Accounting, Auditing, and Per-formance Evaluation, Vol. 20 Nos 1-2, pp. 121-154.
Banimahd, B. and arabi, M. (2016). Common Mistakes in Accounting Empirical Researches. Financial Accounting Knowledge, 3(1), 21-45.
Barth, J. R., Caprio, G., & Levine, R. (2021). Banking Systems around the Globe: Do Regulation and Ownership Affect Performance and Sta-bility?. The World Bank Research Observer, 16(2), 137-167.
Bain, J. S. (1956). Barriers to New Competition. Cambridge, MA: Har-vard University Press.
Beck, T. (2020). Finance in the times of COVID-19: What have we learnt so far? Journal of Financial Stability, 53, 100826.
Caruntu, G. A., & Romanescu, M. L. (2008). The assessment of banking performances-Indicators of Performance in Bank Area.
Demirgüç-Kunt, A., Pedraza, A., & Ruiz-Ortega, C. (2020). Banking sector performance during the COVID-19 crisis. The World Bank.
Elnahass, M., Trinh, V. Q., & Li, T. (2021). Global banking stability in the shadow of COVID-19 outbreak. Journal of International Financial Markets, Institutions and Money, 72, 101333.
FSB (Financial Stability Board). (2022). Enhancing the resilience of non-bank financial intermediation.( https://www.fsb.org/uploads/P220724-2.pdf )
Goodell, J. W. (2020). COVID-19 and finance: Agendas for future re-search. Finance Research Letters, 35, 101512
Hardy, B., Igan, D., & Kharroubi, E. (2024). Resilience in emerging markets: what makes it, what could shake it? (No. 88). Bank for Inter-national Settlements.
Karshenasan, A., Bahraminasab, A., & mamashli, R. (2018). The Effect of Internal Financial Crisis on the Performance of Banks and Non-Operating Activities. Journal of Economic Essays; an Islamic Approach, 15(30), 93-118. doi: 10.30471/iee.2018.1556
Panahian, H., & Abyak, H. (2013). THE EFFECTS OF RISK ON THE EFFICIENCY OF IRANIAN BANKS BASED ON DEA METHOD. Ac-counting and Auditing Research, 5(17), 68-85. https://doi.org/10.22034/iaar.2013.104554
Phillips, A. (1976). A Critique of Empirical Studies of Relations be-tween Market Structure and Profitability. Journal of Industrial Econom-ics, 24(4), 241-249
Pham, T. T., Dao, L. K. O., & Nguyen, V. C. (2021). The determinants of bank’s stability: a system GMM panel analysis. Cogent Business & Management, 8(1), 1963390.
Maleki Oskouei, M. and Borhani, A. (2025). Moderating effect of the COVID-19 pandemic on the relationship between liquidity manage-ment and performance of Insurance companies. New Applied Studies in Management, Economics & Accounting, 8(1), 168-181. doi: 10.22034/nasmea.2025.203845
Maroun, G., & Fromentin, V. (2024). Financial instability in Lebanon: Do the liquidity creation and performance of banks matter?. The Quar-terly Review of Economics and Finance, 96, 101864.
Mason, E. S. (1939). Price and Production Policies of Large-Scale Enter-prise. American Economic Review, 29(1), 61-74.
Masoudian, M. S., Fallahshams, M. and Zomorodian, G. (2022). As-sessing competition and financial stability in the banking system by assessing capital and losses in crisis. The Journal of Economic Studies and Policies, 9(1), 266-293. doi: 10.22096/esp.2022.130383.1369
Mateev, M., Sahyouni, A., Moudud-Ul-Huq, S., & Nair, K. (2024). Bank performance and financial stability during the COVID-19 pandemic: lessons from the MENA region. EuroMed Journal of Business.
Mirzaei, A. (2013). Bank performance during the financial crisis 2007-2010. International journal of business and economics, 12(1), 27.
Sargolzaei, M., Jalali Farahani, A., Afsari Badi, R., & Ahmadi, R. (2020). The effect of financial performance indicators on profitability in Bank Mellat. [cite_start]Journal of Monetary and Banking Researches, 13(43), 69-98. https://sid.ir/paper/1060550/en
Saadat Mir Ghadim, S. Z. and Khani Jazani, J. (2019). Investigating the effect of ownership structure on the financial stability of companies listed on the Tehran Stock Exchange. New Applied Studies in Man-agement, Economics & Accounting, 2(3), 23-37. doi: 10.22034/nasmea.2019.181203
Scherer, F. M., & Ross, D. (1990). Industrial Market Structure and Eco-nomic Performance. Boston, MA: Houghton Mifflin.
Tamizi, A. (2025). The effect of economic misery index on banks' finan-cial performance. New Applied Studies in Management, Economics & Accounting (MIEAOI), 13(46).
Tayebi, S. K., Omidinezhad, M. and Motahari Nejad, A. (2010). A COMPARISON OF EFFICIENCY IN PRIVATE AND GOVERNMENT BANKS USING A PARAMETRIC MODEL. Iranian Journal of Economic Research, 13(41), 1-28.
Too, I. C., & Simiyu, E. (2018). Firms characteristics and Financial Per-formance of general insurance firms in Kenya. International Journal of Business Management & Finance, 1 (39): 672, 89.
Yousefi, GH.M, et al. (2023). The Effect of the Relationship between Financial Performance and Financial Stability of Listed Banks in Tehran Stock Exchange. SECURITIES EXCHANGE.16(62) 57-76.
Zulkifli, R. Fajar, Lestari, B. A. H. and Hanani, T. (2024). The determi-nants of Islamic banking earnings growth: A perspective from Islamic financial literation, inclusion, and higher education. New Applied Studies in Management, Economics & Accounting, 7(2), 72-83. doi: 10.22034/nasmea.2024.184186
Downloads
Published
Issue
Section
License
Copyright (c) 2025 zahra mojdeh, Zabihollah Taheri
This work is licensed under a Creative Commons Attribution 4.0 International License.
