Volume 27, Issue 4 (Winter 2023)
JPBUD 2023, 27(4): 133-152 |
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Rahimzadeh F, Jamali J, Eftekharpour S. (2023). Assessing the Effects of Financial Inclusion on Financial Stability in Iran and Selected Islamic Countries. JPBUD. 27(4), 133-152. doi:10.52547/jpbud.27.4.133
URL: http://jpbud.ir/article-1-2091-en.html
URL: http://jpbud.ir/article-1-2091-en.html
1- Department of Economics and Accounting, University of Guilan, Rasht, Iran , f.rahimzadeh@guilan.ac.ir
2- Department of Accounting, Payame Noor University, Tehran, Iran.
3- Islamic Azad University, Semnan Branch, Semnan, Iran.
2- Department of Accounting, Payame Noor University, Tehran, Iran.
3- Islamic Azad University, Semnan Branch, Semnan, Iran.
Abstract: (1560 Views)
The undeniable role of banks in aggregating and allocating financial resources is possible and sustainable only when banks have financial
stability, especially when faced with financial crises. One of the important and influential factors in financial stability is financial inclusion. Therefore, this study investigates the effect of financial inclusion on financial stability in Iran and selected Islamic countries for the period 2005-2020. The results of the model estimation with dynamic panel data show that financial inclusion has a positive and significant effect on financial stability. In other words, when the number of ATMs, the number of bank branches, and the number of bank accounts with commercial banks are higher, the tendency and access of people to financial services will increase; Thus, the amount of savings and deposits in banks increases, and this, in turn, enhances the ability of banks to cope with financial crises and has a positive effect on their financial stability. The high ratio of non-performing loans, cost-to-income ratio, and loan-to-deposit ratio also have a significant negative impact on financial stability. Furthermore, the impact of macroeconomic variables on financial stability is positive and
significant. In other words, with rising inflation and GDP, the financial stability of banks increases.
stability, especially when faced with financial crises. One of the important and influential factors in financial stability is financial inclusion. Therefore, this study investigates the effect of financial inclusion on financial stability in Iran and selected Islamic countries for the period 2005-2020. The results of the model estimation with dynamic panel data show that financial inclusion has a positive and significant effect on financial stability. In other words, when the number of ATMs, the number of bank branches, and the number of bank accounts with commercial banks are higher, the tendency and access of people to financial services will increase; Thus, the amount of savings and deposits in banks increases, and this, in turn, enhances the ability of banks to cope with financial crises and has a positive effect on their financial stability. The high ratio of non-performing loans, cost-to-income ratio, and loan-to-deposit ratio also have a significant negative impact on financial stability. Furthermore, the impact of macroeconomic variables on financial stability is positive and
significant. In other words, with rising inflation and GDP, the financial stability of banks increases.
Keywords: Financial Inclusion, Financial Stability, Dynamic Panel Data, Selected Islamic Countries, Iran.
Type of Study: Research |
Subject:
financial economics
Received: Feb 25 2022 | Accepted: Nov 29 2022 | ePublished: Mar 15 2023
Received: Feb 25 2022 | Accepted: Nov 29 2022 | ePublished: Mar 15 2023
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