Investigating the Impact of Loan Growth on Bank Valuation in Selected Banks Listed in TSE

Proper valuation of bank assets and the recognition of the factors affecting them play an important role in investment decisions and the economic stability in countries. In this research, the effect of loan growth on bank assets valuation has been studied in Iran's banking system. Estimation of bank valuation using the Tobin's q index has been taken from a subset of relative valuation models. In addition to calculating and analyzing the effect of loan growth, this paper has studied the effect of its abnormal growth. For this purpose, the panel data of the banks listed in TSE during the period of 2009 to 2015 has been investigated using the multivariate regression model. Taking into account the shared timeframe and access to information, 11 sample banks have been selected. Furthermore, some of the bank characteristics are included as control variables in the research models for more precise analysis. The results show that there is a significant negative relationship between the loan growth as well as abnormal loan growth and valuation of the selected banks in TSE.