The Effect of Loan-Portfolio Quality on Financial Performance by Considering the Moderating Role of Financial Health

Banks are very important moderating financial institutions in countries that play a vital role in the financing system. They constantly push stakeholders from depositors to investors. Therefore, the quality of awarded loans is of particular importance. The purpose of this study is to investigate the effect of quality index of banks' portfolios on financial performance of banks considering the role of financial health of banks. In other words, the moderating role of financial health on the relation between loan portfolio and banks’ financial performance is investigated in this study. The population of this study includes 17 banks accepted in the Tehran Stock Exchange during 2009 to 2013. The research followed multiple regression models based on combined data using the EViews software. Evidences suggest that increasing the quality of loan portfolios can increase the financial performance of banks, and the healthy performance of banks can intensify loan portfolios directly.