Investigating the Economic Plans Funding in Developmental Banks from the Perspectives of Employers Working at West Azerbaijan Maskan Bank

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1 International Research Journal of Applied and Basic Sciences 2015 Available online at ISSN X / Vol, 9 (8): Science Explorer Publications Investigating the Economic Plans Funding in Developmental Banks from the Perspectives of Employers Working at West Azerbaijan Maskan Bank Reza Doubra Financial Affairs and Data Section, Central Branch of Maskan Bank, Kashani Street, Urmia, West Azerbaijan, Iran Corresponding Author reza.dobra@yahoo.com ABSTRACT: The aim of the present study is to investigate providing the financial resources of economic plans in developmental banks from the perspective of employers working at West Azerbaijan Maskan Bank. The study is applied, descriptive and survey in terms of goal, quality of data collection, and quality of implementation. The statistical population comprises of 175 employers working at West Azerbaijan Maskan Bank. The population was chosen using stratified random sampling method. To collect the data use was made by questionnaire involving 17 items whose reliability was obtained as using Cronbach alpha coefficient. To make analysis on the obtained data, SPSS software was employed. Also, Kolmogorov-Smirnov and one-sample Wilcoxon test as well as regression test were used in the statistical analysis. The results of the study indicated that providing financial support of economic plans in developmental banks is greater than the average from the perspective of employers working at West Azerbaijan Maskan Bank. Keywords: developmental banks, Maskan Bank, West Azerbaijan INTRODUCTION The task of every financial manager is to optimize the structure of incomes, debts, and wages of stakeholders in order to maximize the wealth of stakeholders. Three decisions are made by financial manager in this field: analysis of financial planning including the adjustment of assets, and wages of stakeholders, improvement of performance in economic sectors as well as planning for future; investment decision-making involving the decisions related to the application and devoting the provided resources among the physical and financial assets in an optimum way; decisions related to financial providing involving the decision pertinent to financial structure and choosing the best quality of financial providing. Based on definition, developmental banks involve the national financial institutes in developing countries which are different in terms of size, resource of financial providing, and field of activities. Basically, developmental banks provide and support the medium-term and long-term investment for productive sectors of economy (reference: encyclopedia of international social sciences). The role of national developmental banks is to assist the meeting of goals related to economic and social development (resource: Financing Development Office, Department of Economic and Social Affairs of the United Nations). Review of literature Financing economic projects in developmental banks In the field of financial management, the short term is usually concerned with the debts whose maturity is less than one year; however, modifying the long-term financial resources has not been defined exactly. Some of the economic sectors employ the mid-term period for the maturity dates which are more than one year and less than 10 years. The long-term period is applicable in maturities which are more than 5 years. So, the interval between 5 to 10 years has not been defined. It I feasible for some people that 8-year loan is considered midterm and for some others as long-term. Table 2 presents methods of midterm and long-term financing.

2 Table 1. Methods of short-term and long-term financing row method definition 1 Long-term bank loans (with collateral and without collateral) 4 5 Bonds (known and anonymous) Common stock option is a type of stock whose holder has the right to purchase a certain number of ordinary shares at the price of certain economic unit 6 Preferred stock 7 Lending by credit institutions bank loans with maturities of more than one year Dare documents whose emitter promises to pay specific amounts of payment in specific times to the holder Is the normal stock options in transaction-based market A type of stock whose holders are restricted to specific area in relation to the incomes and economic water assets Long-term loans to be allotted by insurance economy sector and financial institutions 8 Government loan Loans allotted by the government Developmental banks are the financial institutes which equip the appropriate conditions so that they invest optimally by themselves or by their partners in line with the goals of economic development plans. Tasks, role, and activities of developmental banks are determined by the relationship with the process of economic development. The need to economic development in developed countries and developing countries cause that the institutes are formed to lead the investments in the field of countries economic development in the form of banks and developmental organizations. So far, more than five hundred banks and developmental institutes have taken the responsibility of leading the investment in private and public sectors across the developed countries and in the contexts of financing in developed countries. Such investments involve the policies of economic development, expansion of facilities having to do with economy and development of industrial sections, agricultural and even the cooperative institutions. In other words, developmental banks have significant responsibility in line with helping the issues of economy developments and removing the impediments when it comes to mid-term and long-term financing. In 1979, sixteen savings and mortgage companies along with the housing banks and investment companies of housing of Iran banks formed the Maskan Bank. The activities of Maskan bank have been continued as follows after the integration of mortgage bank and savings: Rural and nomadic loans; 77 accommodation projects; Housing facilities and social support; Quick impact projects in the areas of housing, economic small-scale enterprises; Use of managed funds management and planning for the construction National Mehr housing project in accordance with paragraph "d" Note 6, the 2007 budget and the "organization and support production of residential units," approved in 2008 to build about 2.30 housing units as the most prominent bank measures Bank activities in alignment with government development policies in the housing sector Governing rules on developmental banks in Iran It seems clear in Iran s financial and monetary rules that developmental banks are not directly addresses, only grouping and integrity of commercial and technical banks mentioned in article 7 of the legal agenda related to administrating the affairs of banks approved in The only legal reference in article 2 of the law of development banks clearing the tipuics of issue 3 article 3 of legal agenda based on general policies of 44 constitution rpicniples decreed in 2009/8/15. Based on this resolution, Tose-e Saderat, Sanat Va Madan, Maskan and Toseie Taavon banks are regarded as developmental organizations. In issue 4 of article 3 related to the afore-said law, developmental organizations allot their internal industries to private sectors through holding the priority of managed savings held by public developmental banks for allocating facilities and assistances to the approved plans in new fields using advanced technologies. As issued by the above rule, the afore-mentioned banks remain public-based. Article 22 of the general policies in relation to national production, supporting the job and Iranian assets issued by the supreme leader based on development and support of financial developmental institutes. Article 4-4 of government's economic policies and programs to recession during 2014 and 2015 with the aim of creating production boom in the housing sector and related sectors and to stimulate housing demand out of the current recession, by strengthening institutions and the establishment of housing savings fund facilities and housing savings 1324

3 Except for the above mentioned articles to be mentioned as public developmental banks, it seems that no mention has been made in other related to type, nature, performances, limitations, and etc. with regard to the developmental banks such as the case of Russia, Germany, Turkey, Malaysia which have specific rules. It seems that the central bank holds technical view in this regard. Related studies A number of studies have been conducted in the field of financial resources. Table 2. Hypotheses and results reported by other researchers Scholars Hypotheses and studied model Results Stiavan and Frensidi (2013) Testing the theory of market timing on Funding through issuing stock at the asset structure pricing time Stiavan (2012) Testing the theory of market timing on Negative effect of notary value to market asset structure value Jang Yong (2011) Yatler et al. (2011) Examining the asset structure and market timing Obtaining negative interest and distribution of stock Jong and Kai (2005) Examining the funding decisions, market Negative relations between funding and timing and real investment, Fama and stock interest French model Kordestani and Pirdavari (2012) Kordestani and Najafi Omran (2010) Zanjirdar and Ebrahimirad (2009) Rahnemai Rodposhti et al. (2009) Examining the dynamic status of asset structure and stock interest using temporary analysis Examining the effect of funding on stock interest using integrated and temporary methods Examining the relationship between funding methods and stock interest using correlation method Exploring the relationship between funding activities and stock interest using regression analysis method Negative relationship between financial leverage and stock interest Significant relationship between market previous values and asset structure and changes of asset structure Positive relationship between changes in financing and abnormal change of aggregated stock Positive relationship between funding through disturbing the stocks as well as debt and stock interest Instruments The study design is that of descriptive-survey. The statistical population comprises if employers working at West Azerbaijan Maskan Bank and 175 questionnaires were distributed among them. To collect the data, the researcher-made questionnaire involving 17 items was used to measure the financial resources o economic programs in developmental banks. The questionnaire was developed on Likert-5 item scale. Analysis of statistical data Using descriptive statsitics regarding the examination of demographic attributes of respondents, it exploring the relationship between funding methods and stock interest using correlation method was found that the frequency of participants job experience was 10-15, 15-20, 1-5, 5-10, and 32 experience the 0-30 years. Also, the level of education frequency was bachelor of art, master of art, diploma, associate s degree, and PHD. In addition, 82.3% of the participants were male and 17.7% were female. First hypothesis Economic plans funding in developmental banks is higher than the average from the perspective of employers working at West Azerbaijan Maskan Bank. Table 3. Statistic related to the normality test of economic plans funding in developmental banks variable Z statistic of Kolmogorov-Smirnov Level of significance Economic plans funding in developmental banks As seen in te hbavoe table, the level of significance is less than So, one can say that null hypothesis s rejected at 5% level, hence, the non-normal distribution of economic plans funding in developmental banks is accepted. 1325

4 Diagram 1. Examining economic plans funding in developmental banks Table 4. Examining economic plans funding in developmental banks Test Sample size Test statistic Level of significance One-sample Wilcoxon test According to the above table, the level of significance is less than 0.05, so null hypothesis is rejected. Economic plans funding in developmental banks is effective from the perspective of employers working at West Azerbaijan Maskan Bank. Since the observed mean is higher than that of the population, one can say that economic plans funding in developmental banks is higher than the average from the perspective of employers working at West Azerbaijan Maskan Bank Prioritizing the importance of each independent variables related to economic plans funding in relation to the dependent variable of developmental banks To make meticulous investigation on the effect of three factors related to economic plans funding and developmental banks is possible through running multivariate regression test. Table 5. Variance analysis of regression model Correlation coefficient Changes resource Regression residue total Degree of freedom Determining factor Sum of squares Balanced determining factor Mean of squares F Watson camera Test result: Standard error Level of significance As seen in the above table, since the statistic of Watson camera falls between 1.5 and 2.5 interval, the hypothesis of independent status of errors is accepted and one can use the regression. Also, the regression test level of significance is, so one can conclude that the test is significant at 0.05 error. Hence, alternative hypothesis is accepted and null hypothesis is rejected. Since the determining coefficient R2 is 0.387, which is the ratio of demonstrated changes by independent variables to the total changes, one can say that 38.7% of the change of developmental banks are determined by economic plans funding. variable intercept timing Asset structure Funding decisions Table 6. Parameter coefficients related to timing, assets structure, and decisions of funding line slope of β Beta standardized Level of Calculated t coefficient significance Test result Null hypothesis of all factors is rejected, so the multivariate regression equation of the effect of timing, asset structure, and funding decisions is as follows: Funding timing asset structure funding decisions 1326

5 Table 6 indicates the extent to which each variable has effect on developmental banks variable. Based on this observation, each variable which has greater Beta standardized coefficient has more effect. Financing decisions (standardized coefficient of 0.495) and asset structure (standardized coefficient of 0.278) have the maximum and minimum effects in the present study. REFERENCES Butler A, Cornaggia J, Grullon G, Weston J Corporate financing, managerial market timing, and real investment, Journal of Financial Economics, pp Jieand Zhang C Capital Structure Dynamics and Stock Return. The University of Lowa, Department of Finance (January) Kordestani Gh, Najafi Emran M Investigating the effect of funding methods on future interest of stocks. Journal of Accounting Developments, 2, Rahnemai Rod Poshti F, Talebnia G, Soleimanifar R Examining the relationship between cash flows derived from the activation of funding and stocks interest in Tehran Stock Exchanges. Journal of Stock Exchanges, 8, Setyawan R. I Empirical Tests for Market Timing Theory of Capital Structure on the Indonesian Stock Exchange, Setyawan RI, Frensidy B Empirical Tests for Market Timing Theory of Capital Structure of IPOs. Working paper series. Yang B Dynamic Capital Structure with Heterogeneous Beliefs and Market Timing, abstract=