The effect of banks' performance on the economic integration of provinces: an approach Spatial econometrics

Document Type : Original Article

Authors

• saeed rahimi ¹
• parvaneh salatin ²
• Mahmoud Mahmoudzadeh ³
• Masoud Sufi Majidpour ⁴

¹ PhD student, Department of Economics, Firuzkoh Branch, Islamic Azad University, Firozkoh, Iran

² Assistant Professor, Department of Economics, Firoozkooh Branch, Islamic Azad University, Firoozkooh, Iran

³ Associate Professor, Department of Economics, Firuzkoh Branch, Islamic Azad University, Firozkoh, Iran

⁴ Assistant Professor, Department of Economics, Firuzkoh Branch, Islamic Azad University, Firozkoh, Iran

https://doi.org/10.22067/mfe.2023.78796.1235

Abstract

In this study, the effect of banks' performance on economic convergence in the provinces in the period of 2018-2019 has been investigated using spatial econometrics. The results of the estimation of the models showed that the ratio of facilities to bank deposits as an indicator of banking performance and monetary indiscipline have a negative and significant effect on economic convergence in the provinces. The speed of convergence of conditional beta estimated by considering bank indices is higher than absolute convergence.
Also, real capital stock, human capital and Internet penetration rate have a positive and significant effect and the rate of economic participation has a negative and significant effect on economic convergence. Investigating the effects of spillovers in 2018 showed that the spillover effect of banking performance on neighboring provinces was positive. Also, with the increase in the distance between the provinces, the spillover effect has decreased, in fact, the spillover effects on the neighboring provinces are more than the provinces that are located at a further distance.

Keywords

• : convergence
• economic growth
• spatial econometrics
• banking performance

Main Subjects

• Financial monetary economy