Financial and Banking Strategic Studies

Investigating the impact of internal audit committee structure and organisational quality on the financial stability of banks listed on the Tehran stock exchange

Document Type : Original Article

Authors

Mohamad Mohamadi
Glare Mortezai
Samira Najafi

Department of Accounting, Non-Profit University, Parandak, Iran.

https://doi.org/10.22105/fbs.2024.190908
Abstract
Purpose: Investigation of the impact of the structure of the internal audit committee and the organisational quality of the bank on the financial stability of banks.
Methodology: This research is a library and analytical-causal study based on panel data analysis. In this research, the financial information of 10 banks listed on the Tehran Stock Exchange from 2016 to 2021 (60 bank years) has been examined.
Findings: The results of the research, in support of hypothesis 1, showed that the structure of the bank's internal audit committee has a positive, direct effect on the bank's financial stability. Finally, based on analyses conducted to confirm hypothesis 2 of the research, we concluded that the bank's organisational quality has a positive, direct effect on its financial stability.
Originality/Value: In the years when banks were heavily indebted and breached their financial covenants, the managers of these banks, using modern management techniques, implemented profit management measures and presented a good financial picture of the banks to creditors. One way out of the financial crisis caused by the banks is to improve the quality of internal audit and use profits to expand lending to production and service units. Many banks that were close to bankruptcy struggled to meet their financial obligations. Considering the costs caused by not using internal audit committees, the main consequences of lower return on investments, lower liquidity, re-evaluation of the risks of volatility of organisational quality, the problem of repayment of long-term loans and other financial resources, the financial crisis of banks has spread and the only way out of the crisis that has happened is the availability of loans at low interest rates, new economic policies and government guarantees and, finally, increasing the organisational quality of banks.

Keywords

The structure of the bank's internal audit committee
The bank'
s financial stability
Organizational quality and data panel

Subjects

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Financial and Banking Strategic Studies
Volume 2, Issue 1
Spring 2024
Pages 45-59

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