Investigating the Role of Sanctions on Non-Performing Bank Claims of the Country's Banking System Using the Three-Step Least Squares Technique

Abstract

     With the complexity of monetary economic relations in today's world, the banking sector is increasingly supporting the growth of the real sectors of the economy by playing a mediator, direct or indirect role. The ratio of bank inflows is one of the basic principles of calculating the efficiency of the banking system and consequently, increasing non-immovable receivables leads to increased credit risk in the main cause of bank bankruptcy. On the other hand, the economic dimensions of global sanctions on monetary economy complicate the evaluation of sanctions related indicators in economic studies, which is why it seems that among factors that affect intangible demands, even indirect influence of international sanctions has introduced banks as one of the sources of crises in the economy. Accordingly, in this paper, due to the importance of the role of banks in increasing economic growth, some of the reasons for the impact of global sanctions on increasing inflow demands are considered. Therefore, after identifying the factors affecting sanctions, on non-current demands, using a new index for sanctions, a kind of economic modelling is used. Therefore, using exploratory factor analysis, the index is calculated and the time series of this index is created for the period after the Islamic Revolution until the end of the 1980s. In this regard, 12 variables that were highly affected by sanctions are exploited in the process of indexing sanctions. In the following, using three-stage least squares technique in the context of a small macroeconomic model, while examining the reasons associated with sanctions on important macroeconomic variables such as economic growth, trade, investment and employment, the reason and severity of the impact of these components on non-current demands is discussed. The results of the model estimation show that sanctions on non-current demands of banks are indirect and even affect some directly.