Study of Linear and Nonlinear Interactions between Growth and Profitability, based on Financial Reports

Document Type : Original Article

Authors

Abstract

The purpose of this study is to determine the relationship between growth and profitability in the listed banks in Tehran Stock Exchange in the period of 2008 to 2012. For this purpose, we used the non-linear regression
، regression LAD، and 2SLS by using static and dynamic panel data regressions (GMM). Empirical analysis shows that profit effect on growth is negative، but the growth impact on profit is positive. The interpretation of the results shows that the organizational environments influence on the relationship between firm growth and profit. Other significant finding is that the growth positive effect on profit is only in the older banks. This effect was not observed in younger banks. The results present ways to policy makers in the general development and growth of banks and development in the fields of investment strategies.

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