Journal of Intelligent Financial Management

Journal of Intelligent Financial Management

Analysis of Nash Equilibrium in Iran’s Banking Industry with Emphasis on Accounting Information and Capital Market Efficiency

Document Type : Original Article

Authors
Zahra Dashti 1
Vajiheh Rahmati 2
Amirreza Keyghabadi 3
1 Department of Accounting, CT.C., Islamic Azad University, Tehran, Iran
2 Department of Accounting, YI.C., Islamic Azad University, Tehran, Iran
3 Department of Industrial Management, CT.C., Islamic Azad University, Tehran, Iran
10.25843/JIFM.2025.8563.22056
Abstract
Objective: This study aims to analyze Nash equilibrium in Iran’s banking industry and explain its implications for capital market efficiency, with an emphasis on the role of accounting information. The main focus is to examine how banks’ performance variables affect strategic behavior and its competitive outcomes in the market.
Method: In terms of purpose, the study is applied, and in terms of method, it is analytical-quantitative. Within the theoretical framework, one state-owned bank and one private bank were selected as two representative units. The data are theoretical and parametric in nature and were defined based on model assumptions, theoretical foundations, and prior studies. Data analysis was conducted through mathematical modeling, derivation of profit functions, identification of reaction functions, and simultaneous solution of equations to obtain the Nash equilibrium.
Findings: The results showed that, under the scenario examined, market equilibrium takes a corner form, and the state-owned bank gains the dominant market share due to its structural and institutional advantages. The findings also indicate that variables such as lending rates, deposit rewards, service quality, and credit advantages play a decisive role in shaping banks’ competitive positions.
Conclusion: The findings suggest that capital market efficiency in the banking industry is not determined solely by price competition, but is also influenced by the quality of accounting information, institutional differences, and the way performance variables are reflected in market evaluation.
Keywords
Nash Equilibrium, Iran&rsquo
s Banking Industry, Accounting Information, Capital Market Efficiency, Strategic Behavior
Subjects
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