Analyzing the Impacts of Credit Development on Exporting Probability of Companies Listed in Tehran Stock Exchange (TSE)

Analyzing the Impacts of Credit Development on Exporting Probability of Companies Listed in Tehran Stock Exchange (TSE)

Hadi Salehi (Najafabad Branch, Islamic Azad University, Najafabad, Iran) and Maryam Fahmideh (Najafabad Branch, Islamic Azad University, Najafabad, Iran)
Copyright: © 2018 |Pages: 12
DOI: 10.4018/IJSEM.2018010101

Abstract

This article attempts to analyze the impacts of financial development on the probability of exports by companies listed in Tehran Stock Exchange (TSE) during 2008-2014-time period. The statistical population covered 102 companies listed in the Tehran Stock Exchange (TSE). Considering the analyses, findings and the research results, it is held that the impacts of the independent indicator of financial development, which in turn is computed from base capital ratio to risky assets, on virtual dependent indicator of 0 and 1 of export probability would be 1 in case of export probability and 0 if proven otherwise, are positive and significant. It could be concluded that financial development enhances investments in production and consequently the volume of export in the sample companies. The findings could greatly contribute to description and analyses of financial reporting settings that may provide shareholders and investors with correct and accurate information for the selection of outperforming firms.
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2. Review Of Literature

2.1. Financial Development

Financial development takes place when credit tools, markets and intermediaries lower the information, execution and exchange costs, yet avoid removing them. Financial development thus covers the followings:

  • Generation of information about possible investments

  • Supervising the investments and implementing the rulings of companies

  • Exchange, dispersion and management of risks

  • Allocation of savings

  • Exchange of goods and services (Leven Rose, 2003)

Factors influencing the levels of financial developments in a country also include historical factors such as legal, historical, cultural, ethical, geographical and political components which in turn cover the political environment and macro economy, institutional, legal and information infrastructures, regulations and supervisions, financial liberation and easier access to financial and credit services.

The financial system of a country is comprised of diverse financial markets, tools and products. Financial development, therefore, is a multi-dimensional which, in addition to the development of banking sector, covers non-financial development, developments of monetary sector and policy-making, banking regulations and supervisions, openness of the financial sector, institutional environments and stock exchange development (Dehmordeh and Shokri, 2009).

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