Identification of the Factors Impacting the Increase in Outstanding Claims at Melli and Mellat Banks in North Khorasan Province

The surprising increase in the number of “outstanding claims” of banks in Iran is one of the recent manifestations of the deep irregularities that have prevented the banking system from playing its main roles with regard to contributing to the countrys long-term development. These “outstanding claims” mean that those who receive financial facilities, or in other words the debtors to the banking system, either evade the repayment of the principal debt or its interest or are actually incapable to repay their debts. This study aims to investigate some of the factors that affect the formation of or the increase in banks outstanding claims. These factors include type of granted facilities, type of obtained guarantee, the difference between inflation rate and interest rate of the facilities, period of repayment as well as withholding facilities. The statistical population of this study includes the facilities granted by all branches of Melli Bank and Mellat Bank in North Khorasan province over the period between 2005 and 2010 that have been listed under outstanding claims in banks accounts. The results obtained from testing the studys hypotheses indicate that among the factors studied in this research, variables of type of facilities, difference between inflation rate and facilities interest rate, period of repayment as well as withholding facilities are significantly correlated with the dependable variable.