The Impact of Current Asset Portfolio on Capital Adequacy and Return on Assets, A Study of Selected Iranian Banks(مقاله علمی وزارت علوم)
حوزههای تخصصی:
"Banks accumulate assets that require efficient and profitable management to ensure their viability as going concerns. Current asset portfolio management involves strategic asset allocation, diversification, and rebalancing within predetermined limits. In the Iranian economy, commercial banks are central to the financial system, playing a critical role in financial intermediation. This study investigates the impact of various current asset components, including cash balances, interbank deposits, private sector financing, investments in stocks and other securities, customer demand and savings deposits, and customer term investment deposits, on the performance of selected Iranian banks. The systemic Generalized Method of Moments (SYS-GMM) was utilized to estimate these relationships. The target population consisted of active Iranian commercial banks with publicly available financial statements. Data were sourced from official financial reports published by independent auditors for the period 2009 to 2024.The first regression model reveals that a bank’s Capital Adequacy Ratio (CA) is positively self-regressive, indicating an increase at a similar rate in the subsequent year. While customer investment deposits exhibited a negative effect on CA, interbank deposits, bank cash balances, the volume of facilities extended to the private sector, and Return on Assets (ROA) all demonstrated significant positive effects. The second regression model indicates that a one percent increase in ROA in one period leads to a 0.6 percent increase in the subsequent year. Furthermore, customer demand and Qarz al-Hasana savings deposits, along with the CA ratio, positively influence ROA, whereas banks’ investments in stocks and other securities showed a negative effect. Finally, the study concludes with relevant policy recommendations for bank managers."
