The Impact of Financial Pressures and Risk Management on Financial Performance of Investment Firms and Banks

Ramazanali Jobleh, MohammadReza Abdoli, AliAsghar Mahmoodzadeh

Abstract


In developed economies, the key role of risk management in realization of organizational goals has been well recognized so that its achievements have been correctly exploited. However, in most developing countries, the importance of risk management has not been recognized. The lack of proper risk management systems has resulted in significant losses. Managers in all organizations dealing with risk. Given the importance of risk management, the present study examines the impact of financial pressures and risk management on financial performance of investment firms and banks. For this purpose, 106 firms listed on Tehran Stock Exchange (TSE) were studied for a 5-year period from 2006 to 2011. The results of hypothesis testing showed that there is no significant correlation between risk, financial performance and financial performance of investment firms. However, a significant correlation was found between financial constraints and risks and financial performance of investment firms and banks.

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