EVALUATION OF THE EFFECT OF FINANCING THROUGH BANKING DEVELOPMENT ON THE COST OF EQUITY

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SADEGHI SHARIF SEYED JALAL; HOSSEIN ABADI MOHAMMAD

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Journal: Financial Economics Year:2018 | Volume:11 | Issue:41 Page(s): 67-84

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Information Journal Paper

Title

EVALUATION OF THE EFFECT OF FINANCING THROUGH BANKING DEVELOPMENT ON THE COST OF EQUITY

Author(s)

SADEGHI SHARIF SEYED JALAL | HOSSEIN ABADI MOHAMMAD | Issue Writer Certificate

Keywords

BANKING DEVELOPMENTQ1

LOANQ2

GDPQ1

COST OF EQUITYQ1

POOLED LEAST SQUAREQ1

Abstract

Companies are financed by two equity and debt instruments. Debt financing due to tax savings and its lower rate compared to the expected returns of shareholders is a more desirable solution. Banks are one of the main debt financing institutions and BANKING DEVELOPMENT can play an important role in facilitating financing and reducing cost of capital. Some experts believe that BANKING DEVELOPMENT plays an important role in providing corporate liquidity, risk sharing, efficient allocation of resources, expanding economic opportunities, increasing productivity and reducing COST OF EQUITY. While others argue that in economies whose banking system is affected by government interventions, there is evidence that there is no relationship or a positive relationship between BANKING DEVELOPMENT and the COST OF EQUITY. In this survey we examine the impact of BANKING DEVELOPMENT on COST OF EQUITY in the form of a pooled regression model with other variables includes customer price index (CPI), leverage (LEV), return of equity (ROE), market to book value (MB), by selecting 2155 samples from 2001 to 2016 from Tehran Stock Exchange companies assuming there are financial data. The result shows that BANKING DEVELOPMENT reduces COST OF EQUITY and it has the greatest impact. ROE, MB and CPI variables have positive relation and LEV has negative relation with COST OF EQUITY. There is no significant relation between Size and Beta variables with COST OF EQUITY. Because of co linearity, the impact of interaction of growth company and BANKING DEVELOPMENT wasn’t significant in model.

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APA: Copy

SADEGHI SHARIF, SEYED JALAL, & HOSSEIN ABADI, MOHAMMAD. (2018). EVALUATION OF THE EFFECT OF FINANCING THROUGH BANKING DEVELOPMENT ON THE COST OF EQUITY. JOURNAL OF FINANCIAL ECONOMICS (FINANCIAL ECONOMICS AND DEVELOPMENT), 11(41 ), 67-84. SID. https://sid.ir/paper/229155/en

Vancouver: Copy

SADEGHI SHARIF SEYED JALAL, HOSSEIN ABADI MOHAMMAD. EVALUATION OF THE EFFECT OF FINANCING THROUGH BANKING DEVELOPMENT ON THE COST OF EQUITY. JOURNAL OF FINANCIAL ECONOMICS (FINANCIAL ECONOMICS AND DEVELOPMENT)[Internet]. 2018;11(41 ):67-84. Available from: https://sid.ir/paper/229155/en

IEEE: Copy

SEYED JALAL SADEGHI SHARIF, and MOHAMMAD HOSSEIN ABADI, “EVALUATION OF THE EFFECT OF FINANCING THROUGH BANKING DEVELOPMENT ON THE COST OF EQUITY,” JOURNAL OF FINANCIAL ECONOMICS (FINANCIAL ECONOMICS AND DEVELOPMENT), vol. 11, no. 41 , pp. 67–84, 2018, [Online]. Available: https://sid.ir/paper/229155/en

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