The Impact of Non-Performing Loans on Bank Efficiency

Document Type : Research Paper

Authors

1 . Assistant Professor of University of Tehran and Khatam Institute of Higher Education

2 Assistant Professor of Iran Banking Institute

3 M.A. in Accounting Banking

Abstract

The objective of this research is to estimate efficiency of private banking industry in Iran and evaluate non - performing loans on it. In this research have been applied actual data of seven private banks from 1385-1390 and by intermediary approach to bank and parametric method (SFA) and using cobb-Douglas cost function have been practiced to ranking bank efficiency. Then the estimations of efficiency attained in first stage evaluated on non- performing loans and other factors by using of simultaneous equation and achieved this conclusion that non -performing loans have negative effect on efficiency. Also age, grows of assets and activities of off balance sheet have negative effect on it. The variables of price of work, price of physical capital and loans are effective on amount of cost and significant in %99 interval but the variables of price of financial capital and investments are not effective on it

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