Evaluating the Impact of Advertising Intensity on Banking Performance

This article aims to evaluate the impact of advertising intensity (ad to sales ratio) on the performance of the Iranian banking system using panel data for the 11 Iranian banks over the period 2002-2009. Unbalanced panel data approach is employed to evaluate the impact of advertising intensity oncurrent account growth, gharz-al-hasaneh deposit, term deposit and return on equity (ROE). The estimation results show that advertising intensity has no statistically significant effects on the current account growth in the banking system while it has positive and statistically significant effect on gharz-alhasaneh deposit and term deposit growth. When a dummy variable included in the models, the results are slightly changed. However, advertising intensity has positive effect on ROE only for private sector but negative in public banks.