Modern Research in Decision Making

Analysis of Conflicts of Interest in Iran's Banking System: Utilizing Game Theory and Graph Models to Evaluate the Equilibrium Among Stakeholders

Document Type : Original Article

Authors

Hossein سیلسپور 1
Mohammad javad mohagahnia 2
shima ahmadi 3

1 PhD Student, Department of Banking Finance, Faculty of Management and Accounting, Allameh Tabatabaei University (RA), Tehran, Iran

2 Assistant Professor, Department of Finance and Banking, Faculty of Management and Accounting, Allameh Tabatabaei University (RA), Tehran, Iran

3 PhD student, Accounting Department, Faculty of Social Sciences and Economics, Alzahra University, Tehran, Iran.

Abstract
One of the fundamental challenges in Iran's banking system is the conflict of interest, which plays a critical role in public trust. This issue points to situations where individual personal interests are at odds with their duties and responsibilities. Without addressing the actors involved in conflicts of interest, achieving and controlling these conflicts cannot be assured. Therefore, this study employs content analysis, interviews with experts, and the identification of their desires and actions. Through the application of game theory and graph models, the equilibrium status among stakeholders such as banks, customers and borrowers, legislators and regulatory bodies, investors and market analysts, and consumer rights organizations has been identified. The equilibrium state among the actors was determined through interviews regarding their preferences and with the help of evolutionary path analysis, tracing the actors' movements from the current state to the equilibrium state. The study found that this equilibrium does not represent an ideal state for the community and policymakers, indicating a need for a shift in stakeholders' preferences. Through backward game analysis, it has been determined that legislators and regulatory bodies should strengthen oversight and transparency, and consumer rights organizations should initiate awareness campaigns and collaborate with lawmakers and supervisory bodies to enhance protective regulations, aiming to achieve an optimal state for the national economy. This research can assist the Islamic Consultative Assembly in developing more effective legislative strategies through a better understanding of the interactions between stakeholders.

Keywords

Conflict of Interest
Game theory
Graph model
Stakeholder interaction
[1] Jalali, S., Rostamy, A.A., & Seifoddini, J. (2024). A Two-step Model to Evaluate the Efficiency and Rating of Banks and Explain the Role of Credit Risk (Case Study of Commercial Banks Listed in Tehran Stock Exchange). Journal of Money & Economy, 18(1), 1-32. doi: 10.61186/jme.18.1.1 [In Persian]
[2] Yousefi Ghaleh Roudkhani, M.A., Tehrani, R., & Mirlouhi, S.M. (2021). Investigating the Impact of Financial Performance Metrics on Financial Stability of Banks in the Financial Crisis. Management Research in Iran, 25(2), 1-21. doi: 20.1001.1.2322200.1400.25.2.1.3 [In Persian]
[3] Sobhani, H., & Elahi, F. (2023). Situations and Instances of Conflict of Interest in the Islamic Republic of Iran Banking System. Majlis and Rahbord, 30(114), 239-277. doi: 10.22034/MR.2022.5096.4900 [In Persian]
[4] Seyed Shokri, K. (2022). Conflict of Interest in the Imperial Bank and Its Effects on the Iranian Economy. The Journal of Islamic History and Civilization, 17(37), 125-143. doi: 10.30495/jhcin.2022.19585 [In Persian]
[5] Navabi Moghadam, Z., Zare, A., Yousefi Sadeghloo, A., & Jamali, J. (2022). An Investigation into the Conflict of Interests of Bank Shareholders Using the Corporate Governance Approach. Legal Research Quarterly, 24(96), 351-375. doi: 10.29252/JLR.2021.185115.1659 [In Persian]
[6] Karamipour, M., & Kheiri Ahmad Abadi, I. (2023). A Comparative Study of National and International Platforms for People’s Participation in the Prevention of Administrative Corruption: A Case Study of the Crime of Conflict of Interest. Adl va Ensaf Comparative Law Research Quarterly, 6(21), 51-73. doi: 10.22034/aeclr.2024.405791.1124 [In Persian]
[7] De Jonghe, O., Diepstraten, M., & Schepens, G. (2015). Banks’ Size, Scope and Systemic Risk: What Role for Conflicts of Interest? Journal of Banking & Finance, 61, S3-S13. doi: https://doi.org/10.1016/j.jbankfin.2014.12.024
[8] Kroszner, R.S., & Strahan, P.E. (2001). Bankers on Boards: Monitoring, Conflicts of Interest, and Lender Liability. Journal of Financial Economics, 62(3), 415-452. doi: https://doi.org/10.1016/S0304-405X(01)00082-4
[9] Dori, M., Jafari, M., & Chaharsooghi, K. (2019). Choosing Coordinated Ordering Policy in the Two-Level Supply Chain: A Game Theory Approach. Journal of Modern Research in Decision Making, 4(3), 47-73. doi: 20.1001.1.24766291.1398.4.3.3.1 [In Persian]
[10] Dorri, M., Jafari Eskandari, M., & Chaharsooghi, K. (2021). Competition Between Two Supply Chains with Demand Dependent on Price and Lead Time: A Game Theory Approach. Journal of Modern Research in Decision Making, 6(3), 23-49. doi: 20.1001.1.24766291.1400.6.3.2.4 [In Persian]
[11] Samsura, D.A.A., van der Krabben, E., & van Deemen, A.M.A. (2010). A Game Theory Approach to the Analysis of Land and Property Development Processes. Land Use Policy, 27(2), 564-578. doi: https://doi.org/10.1016/j.landusepol.2009.07.012
[12] Abdoli, G., & Majed, V. (2012). Analyzing OPEC Members Behavior: A Cooperation Game Approach. Journal of Economic Modeling Research, 2(7), 27. [In Persian]
[13] Mainardes, E., Alves, H., & Raposo, M. (2011). Stakeholder Theory: Issues to Resolve. Management Decision, 49(2), 226-252. doi: https://doi.org/10.1108/00251741111109133
[14] Friedman, A., & Miles, S. (2006). Stakeholder: Theory and Practice. UK: Oxford University Press. doi: https://doi.org/10.1093/oso/9780199269860.001.0001
[15] Freeman, R.E. (1984). Strategic Management: A Stakeholder Approach. Pitman Publishing Inc. doi: https://doi.org/10.1017/CBO9781139192675
[16] Mitchell, R.K., Agle, B.R., & Wood, D.J. (1997). Toward a Theory of Stakeholder Identification and Salience: Defining the Principle of Who and What Really Counts. Academy of Management Review, 22(4), 853-886. doi: https://doi.org/10.2307/259247
[17] Bryson, J.M. (2004). What to Do When Stakeholders Matter: Stakeholder Identification and Analysis Techniques. Public Management Review, 6(1), 21-53. doi: https://doi.org/10.1080/14719030410001675722
[18] Ansari, M.A., Falahati, A., & Delangizan, S. (2017). Modelling and Strategic Analysis of Pension Crisis in Iran: A Game Theory Approach. Journal of Improvement Management, 11(35), 61-92. [In Persian]
[19] Mohagheghnia, M.J., Seilsepoor, H., & Ahmadi, S. (2023). Designing Justice Index in Islamic Banking with Content Analysis Approach and Fuzzy Decision Making Method. Islamic Financial Research, 12(2), 266-306. doi: 10.30497/IFR.2023.243933.1805 [In Persian]
[20] Abdoli, G. (2007). Game Theory and Its Applications (Static and Dynamic Games with Complete Information). Tehran: Tehran University Jihad Academic Publications. [In Persian]
[21] Whitton, H., & Bertók, J. (2005). Managing Conflict of Interest in the Public Sector: A Toolkit. OECD Publishing. doi: https://doi.org/10.1787/9789264018242-en
[22] Demmke, C. (2007). Managing Conflict of Interest: Frameworks, Tools, and Instruments for Preventing, Detecting, and Managing Conflict of Interest. Proceedings of the 5th Regional Seminar on Making International Anti-Corruption Standards Operational, Jakarta, Indonesia.
[23] Herassani, S. (2020). Methodological Framework for Analyzing Conflicts of Interest in Organizations. Empowerment Center for Governance and Society, Jihad University, Report No. 110, Serial No. 9904. [In Persian]
[24] Avci, S.B., Schipani, C.A., & Seyhun, H.N. (2018). Eliminating Conflicts of Interests in Banks: The Significance of the Volcker Rule. Yale Journal on Regulation, 35, 343. doi: http://dx.doi.org/10.2139/ssrn.3017207
[2۵] Srinadi, N. L. P., Hermawan, D., & Jaya, A. A. N. A. (2023). Advancement of Banking and Financial Services Employing Artificial Intelligence and the Internet of Things. Journal of Wireless Mobile Networks, Ubiquitous Computing, and Dependable Applications, 14(1), 106–117. https://doi.org/10.58346/JOWUA.2023.I1.009
[2۶] Rosenhead, J., & Mingers, J. (1989). Soft Modeling in Management. Translated by A. Azar & A. Anvari (2013). Tehran: Negah Danesh Publications. [In Persian]
[2۷] Wang, J., Hipel, K.W., Fang, L., & Dang, Y. (2018). Matrix Representations of the Inverse Problem in the Graph Model for Conflict Resolution. Operational Research, 269(4), 1-12. doi: https://doi.org/10.1016/j.ejor.2018.03.007
[2۸] Kilgour, D.M., & Hipel, K.W. (2010). Conflict Analysis Methods: The Graph Model for Conflict Resolution. In Kilgour, D.M., & Eden, C. (Eds.) , Handbook of Group Decision and Negotiation. Springer, Dordrecht, Netherlands, 203-222. doi: 10.1007/978-90-481-9097-3_13
[2۹] Fang, L., Hipel, K.W., Kilgour, D.M., & Peng, X. (2003). A Decision Support System for Interactive Decision Making - Part II: Analysis and Output Interpretation. IEEE Transactions on Systems, Man, and Cybernetics, Part C: Applications and Reviews, 33(1), 56-66. doi: 10.1109/TSMCC.2003.809360
[۳۰] Glaser, B., & Strauss, A. (1967). The Discovery of Grounded Theory: Strategies for Qualitative Research. Mill Valley, CA: Sociology Press.
[3۱] Kinsara, R.A., Kilgour, D.M., & Hipel, K.W. (2015). Inverse Approach to the Graph Model for Conflict Resolution. IEEE Transactions on Systems, Man, and Cybernetics: Systems, 45(5), 734-742.

Home

Guide for Authors

Submit Manuscript

Reviewers

Contact Us