Abstract
Article history: Received March 26, 2012 Received in Revised form June, 12, 2012 Accepted 19 June 2012 Available online June 26 2012 In this paper, we study the effect of different influencing factors on profitability of banking system in Iran for a panel data from 2001 to 2010. The sample of banking system includes ten different banks and two different types of internal and external variables are considered. Internal factors include ownership ratio, ratio of bank customers' deposit to banks' assets, ratio of total loans given to all assets, ratio of total interest free loans on total assets, ratio of interest free revenues on total revenue. External factors include economic growth, actual rate of interest and inflation rate. The proposed model of this paper uses econometrics method to investigate the proposed model and the preliminary results indicate that ownership ratio, ratio of total equity on total assets, along with inflation rate have negative impact on profitability. In addition, the ratio of customers' deposit on total assets, the ratio of total loans on total assets and economic growth have positive impact on profitability. © 2012 Growing Science Ltd. All rights reserved.
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