The Effect of Stable Funding Strategy on Profitability in Iranian Banking System

Banks have an important role in providing and allocating resources, identifying investment opportunities, and diversifying risk. According to the Bank International Settlement (BIS), one of the main factors of weakness in the banking system is lack of financial resources for lending of banks to various sectors of the economy. The weaknesses and inefficiencies in financing indicate a lack of optimal capital structure in the banking system and stable funding with aim of provides secure facilities in banking. In this paper, we survey the effect of stable funding strategies from the perspective of the net stable funding ratio (NSFR) and its effect on the bank profit margin with aim of compensating the financing risk in the Iranian banking system for the period from 2006-2016.The Stable financing strategies are divided into two parts of the stables allocation and funding strategies. Funding strategies in turn are divided into three sections and allocations strategies are divided into four sections. According to the results, the sustainability of the banks' resources in the balance sheet requires the allocation of funds in the form of facilities and loans on the other side of the balance sheet i.e. assets. The proper functioning of banks has an impact on improving the business environment of the banks.