Document Type : Research Paper
Authors
Assistant Prof., Department of Accounting, Lahijan Branch, Islamic Azad University, Lahijan, Iran.
10.22059/acctgrev.2026.407752.1009202
Abstract
Objective
Banking entrepreneurship has emerged as one of the most significant structural and regulatory challenges confronting Iran’s banking system. This phenomenon, often interpreted as non-banking activities, diverts capital inefficiently from financial intermediation toward direct investments in commercial enterprises, thereby significantly undermining resource allocation efficiency and heightening systemic risks. From the perspective of agency theory, the root of this behavior can be explained by managers’ short-term interests and their conflict of interest with retail investors. The main objective of this study is to empirically assess the efficiency of ownership structure and the performance quality of the audit committee in restraining Iranian banks’ propensity toward entrepreneurship. This study seeks to examine whether strengthening these two supervisory pillars can help redirect banks toward their core mission.
Methods
This study is descriptive in terms of its applied objective and the nature and method of data collection. Its primary goal is to determine the existence, extent, and nature of the impact of the variables under examination. Given that it uses historical data to test its hypotheses, it is categorized as an ex-post facto study and theoretically falls within the realm of positivist research. This study uses a deductive-inductive approach. The statistical population of the research comprises active banks in Iran. Accordingly, a sample of 20 banks was selected over a 10-year period (2014–2023) to test the research hypotheses. The hypotheses were analyzed using a multivariate regression model.
Results
The empirical results of this research confirm a significant negative association between managerial ownership and the level of banking entrepreneurship; i.e., managerial ownership significantly reduces banks’ entrepreneurship. This implies that as managers' share of bank ownership increases, their incentives to engage in entrepreneurship diminish, aligning their personal interests more closely with those of shareholders. Furthermore, ownership concentration as an effective monitoring mechanism has reduced the extent of banking entrepreneurship, indicating an increase in the effectiveness of shareholders' supervision. Contrary to expectations, state ownership and institutional ownership did not exhibit a significant effect on constraining this phenomenon, which may reflect governance deficiencies in these sectors. Most importantly, the hypothesis concerning the moderating role of the audit committee within Iran’s banking framework was not supported, implying that formal internal control mechanisms have so far been ineffective in mitigating the banks’ inclination toward entrepreneurship.
Conclusion
The findings indicate that banks’ enterprising behavior in Iran is shaped less by conventional corporate governance frameworks and more by political interventions, institutional weaknesses, and regulatory shortcomings. Accordingly, to address the phenomenon of bank enterprising, institutional reforms are recommended at three levels: first, given the limited effectiveness of audit committee independence, alternative internal governance mechanisms should be identified and strengthened; second, the government’s role in banking institutions should be redefined, with political interventions minimized; and third, the capacity, oversight role, and independence of institutional shareholders should be enhanced. The findings of this study may provide a basis for revising banking regulatory frameworks and offer valuable guidance to policymakers, bank executives, and supervisory authorities in redirecting banks toward their core mandate of financing productive activities and supporting economic growth.
Keywords
Subjects
