The Impact of Off Balance Sheet Activities on Bank's Risk and Return

In the present research, the impact of the off balance sheet activities (with twoindexes of noninterest share income and sum of the off balance sheet activities) on thebank’s returns (with two indexes of return on asset ratio and return on equity ratio) wasanalyzed using the data of 10 commercial banks including 6 governmental banks and4 private banks within the period of 2001 to 2008 and the results showed that the offbalance sheet activities have generally a significant impact on the bank’s return.The impact of the off balance sheet activities on the total banks’ risks index (withthe index of sum of net interest income variance and noninterest income variance) wasevaluated, as well and the results showed that this relation is completely considerable.The results of this research generally show that the off balance sheet activities havea significant impact on bank’s return which is caused bank’s growing trend toward theseactivities, although these activities increase the banks’ risks because they are unstable,despite the traditional banking activities.