International Journal of Finance & Managerial Accounting

International Journal of Finance & Managerial Accounting

Liquidity risk and credit risk on the stability of public and private banks: considering government debt, inflation rate, and interest rate

Document Type : Original Article

Authors
Mansoureh Gholamreza 1
Fraydoon Rahnamay Roodposhti 2
Mirfeiz Fallah Shams 3
1 Graduated with a PhD in Financial Engineering, Tehran Branch, Science and Research Branch, Islamic Azad University, Tehran, Iran
2 Professor of Accounting and Finance Department, Science and Research Unit, Islamic Azad University, Tehran, Iran
3 Associate Prof., Department of Financial Management, Faculty of Management, Central Tehran Branch, Islamic Azad University, Tehran, Iran
10.22034/ijfma.2025.68798.1891
Abstract
Financial stability in the banking system is one of the main features of successful world economies. Financial institutions, especially the banking system, play an irreplaceable and central role in the economic system; From the point of view that their performance, on the one hand, can provide the grounds for economic growth and development, and on the other hand, the conditions of disorder and collapse of an economic system. In this regard, the purpose of this research is to consider the effect of Liquidity risk and credit risk on the stability of public and private banks by assuming government debt, inflation rate, and interest rate. The final sample of the research was taken as a census equal to the accepted banks in the Tehran Stock Exchange from the years 2008 to 2019. The research hypotheses were investigated using two-stage least squares and ordinary least squares regression tests. The results of research hypotheses showed that there is an inverse and significant relationship between liquidity risk and the index of financial health and stability of banks. There is an inverse and significant relationship between credit risk and the index of financial health and stability of banks. Credit risk, government debt, inflation rate, and interest rate have a positive and significant effect on banks' liquidity risk
Keywords
liquidity risk
credit risk
bank stability
government debt
inflation rate
interest rate
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