Investigating the effects of issuance of bank debt guarantee on profitability of banking industry

• Main Authors: Reza Pirayesh, Majid Gharagozloo
• Format: Article
• Language: English
• Published: Growing Science 2014-02-01
• Series: Management Science Letters
• Subjects: Bank debt guarantee; Customer retention; Profitability; Bank resources
• Online Access: http://www.growingscience.com/msl/Vol4/msl_2013_408.pdf

This paper presents an empirical investigation to study the relationship between bank debt guarantee and profitability, increase in banks resources and customer retention. The proposed study has been implemented in one of Iranian banks located in city of Zanjan, Iran over the period of 10 years. The study has used Pearson correlation test to examine three hypotheses of the survey. The results indicate that there were positive and meaningful relationship between bank debt guarantee and profitability (r = 0.863, P-value = 0.001), a positive relationship between bank debt guarantee and bank resources (r = 0.708 with P-value = 0.015) and there was a positive and meaningful relationship between bank debt guarantee and customer retention (r = 0.252 with P-value = 0.001).