Evaluation the Effect of Financial and Non-financial Variables on the Economic Value added of Iranian Banks

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AHMADYAN AZAM; KHANSARI RASOOL

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Journal: Journal of Monetary and Banking Research Year:2022 | Volume:14 | Issue:50 Page(s): 593-620

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Title

Evaluation the Effect of Financial and Non-financial Variables on the Economic Value added of Iranian Banks

Author(s)

AHMADYAN AZAM | KHANSARI RASOOL | Issue Writer Certificate

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Abstract

Objective The economic value added of banks is a new approach to assessing the performance of banks that, while not having accounting problems in profit and loss statements, can predict the financial health of banks. Unlike developed countries, the most important measure of financial performance in Iranian banks is net profit, but modern financial theory seeks to maximize value rather than maximize profit. The lack of a culture of using value-based financial performance metrics has neglected important and irrefutable concepts such as capital expenditures and opportunity costs. In addition, this criterion is influenced by various factors that can have a positive or negative effect on it. Therefore, it is important to measure this criterion and examine the effect of various factors on it in the Iranian banking network. Methods In this paper, the effect of various financial and non-financial factors on the economic value added of banks, during the period 2006-2018, is investigated using panel data approach. Experimental literature has been used to identify the factors affecting banks' economic value added. Results The results show the distinct behavior of economic value added in different cycle periods. In addition, improving risk management in the banks and improving banks' financial health has a positive effect on the economic value added of the Iranian banks. An examination of the combination of banks' asset and debt portfolio indicates that banks' approach to raising earning assets can help improve banks' economic value added. Conclusion The financial ratios approach in evaluating the performance of the Iranian banking network, while having accounting problems, cannot adequately express the health status of a bank. Therefore, in addition to applying the financial ratios approach, it is also important to measure the economic value added of banks as a new financial approach to evaluate the performance of banks and to evaluate the most important factors affecting it.

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APA: Copy

AHMADYAN, AZAM, & KHANSARI, RASOOL. (2022). Evaluation the Effect of Financial and Non-financial Variables on the Economic Value added of Iranian Banks. JOURNAL OF MONETARY AND BANKING RESEARCHES, 14(50 ), 593-620. SID. https://sid.ir/paper/1061866/en

Vancouver: Copy

AHMADYAN AZAM, KHANSARI RASOOL. Evaluation the Effect of Financial and Non-financial Variables on the Economic Value added of Iranian Banks. JOURNAL OF MONETARY AND BANKING RESEARCHES[Internet]. 2022;14(50 ):593-620. Available from: https://sid.ir/paper/1061866/en

IEEE: Copy

AZAM AHMADYAN, and RASOOL KHANSARI, “Evaluation the Effect of Financial and Non-financial Variables on the Economic Value added of Iranian Banks,” JOURNAL OF MONETARY AND BANKING RESEARCHES, vol. 14, no. 50 , pp. 593–620, 2022, [Online]. Available: https://sid.ir/paper/1061866/en

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