The Impact of Profit Rate of the Exchange Contracts on the Bank Performance

Considering the important role of banks in the economy, it is necessary to study the effect of internal and external factors on the performance of banks. In this regard, this paper examines the impact of bank profit rates of the exchange contracts on the performance of banks during the time period of 2008-2013. For this purpose, econometrics analysis and estimation of panel data is used. The results show that there is a significant relationship between profit rate and other selected variables with the bank’s profitability. This study showed that the profit rate of the exchange contracts has a positive relationship with the return on assets ratio of banks. Hence, while selected banks considered in this study have increased their assets using different methods due to the inflationary conditions, they do not welcome the reduction in profit rates of the exchange contracts. This issue may be true in all other banks due to their role in corporates ownership. Accordingly, finding no solution to leave corporate ownership by the banks, the conditions for high rates of loans in the country is paved. Also, the results show that the other banking variables such as, interest-free income to assets ratio and loan to asset ratio, has a significant and positive correlation with the profitability of banks