Estimation of Bankruptcy Immunity in Government and Private Banks of Iran (Duration Models Approach)

In the wake of recent financial crisis, large banks have been considered as important factors in financial markets in the world, since these bankschr(chr(chr(chr('39')39chr('39'))39chr(chr('39')39chr('39')))39chr(chr(chr('39')39chr('39'))39chr(chr('39')39chr('39')))) failure could affect the whole economy by extending systemic risk. With regard to this issue, when large banks face insolvency or bankruptcy, larger part of economy would be affected, and with the interconnectedness between banks and financial institutions, the effects of large bankschr(chr(chr(chr('39')39chr('39'))39chr(chr('39')39chr('39')))39chr(chr(chr('39')39chr('39'))39chr(chr('39')39chr('39')))) bankruptcy will have greater impact on the real economy. After financial crisis, many studies have concentrated on the failure of TBTF banks, and the role of these banks in the incident of financial crisis. Number of specialists emphasize on bank size and Basel Committee on Banking Supervision regulated by the classification of banks and their systemically important banks. In this paper, the bankruptcy immunity Period has been estimated for 25 government and private banks of iran by applying duration model approach. The empirical findings showed that the return on equity and banks capital have positive and significant effects on the bankruptcy immunity Period and the period of  bankruptcy immunity is 2.68.