Investigating the Effect of Oil Price and Stock Market Shocks on Profitability of Banking System: Application of RDCGE Model

The role and importance of the banking system as the primary source of financing for businesses is necessary to investigate the factors affecting the profitability of this sector. therefore, this research uses a computable general equilibrium model (rdcge), the effect of exchange rate shock, crude oil price, stock price index, and government budget on iran's banking system profitability. for this purpose, the social accounting matrix (sam) of 2011 and the input-output table of 2016 were used to analyze the twelve design scenarios and the profitability of the banking system in response to shocks 2, 5, and 10 percent in the exchange rate, crude oil price, stock price index, and government budget are evaluated. the findings reveal that the exchange rate and crude oil prices negatively affect banking system profitability, while the total stock price index and government budget have positive effects. the funding comparison shows that in different scenarios, the shocks of the exchange rate, oil price, stock market, and government budget, respectively have the most effect on bank profitability. thus, appropriate use of the national development fund and government support for the stock market are effective for reducing exchange rate shock and crude oil prices and controlling the consequences of these shocks.