Abstract for: Business Dynamics of Iranian Commercial Banks

Iranís banking system is one of important pillars of its financial system that affects its economic growth. The business model of Iranian banks, as vital vessels of Iranís economy. Establishing and developing stable incomes as well as increasing profitability are the most fundamental issues for Iranian banks. Capital adequacy is one of the most important indicators of banking success in recent years, which requires a capital increase. It would result in an increase in banksí incomes, and in establishing appropriate businesses and their activities. But, available activities in Iranís banking, in turn, would increase incomes and decrease its capital adequacy. So banks would experience a paradox, in which, they need a system dynamic analysis of business banking to resolve that paradox. This paper investigates the dynamics of a business of an Iranian commercial bank as a case study, and also represents a causal model for that paradox by a system dynamic approach. Finally, it presents some solutions. The results show that, based on business structure of Iranian banks, giving facility-related incomes up and making policies on the development of fees and service incomes are the most important approaches to resolve the mentioned paradox of Iranian banks.