INVESTIGATING THE EFFECT OF FINANCIAL RISK ON THE PROFITABILITY AND RESILIENCE OF IRANIAN BANKS

One of the most important issues in the banking industry is risk issues and risk management. At the top of the nancial system of any economy is the banking industry, which in developing countries has the largest role in nancial intermediation, therefore one of the biggest tasks of the bank is to create a balance in correct assessment and risk management so as to create sustainable pro ts and value for shareholders. The purpose of this study was to investigate the eect of credit risk, liquidity risk, and capital adequacy ratio on the pro tability and resilience of Iranian banks using the panel data method during the period 2016 to 2021. The statistical population of this study includes 27 banks in the country that are operating with the permission of the Central Bank. In the present study, the variables of credit risk, liquidity risk, and capital adequacy ratio are considered as independent variables while pro tability and resilience are considered dependent variables, and data related to these variables are extracted from the website of the Central Bank and Iran Banking Higher Education Institute. At rst, the signi cance of the data was investigated and the result showed that the data are signi cant. Also, based on the Chow and Hausman tests, the appropriate model for the problem was selected. A data normality test was also performed and the results show that all data are normal. Then, by performing the tests of error independence, heterogeneity of variance, and alignment of independent variables, the nal model of the research was tted. The results showed that credit risk did not have a signi cant eect on pro tability but had a negative and signi cant eect on resilience and also liquidity risk had a signi cant negative eect on both pro tability and resilience. Among these, the capital adequacy ratio has a positive and signi cant eect on pro tability and a negative and signi cant eect on liquidity.