Hamid  Kordbacheh, Nader  Mehregan, Mina  Soltani Nasrabadi, 
    The Optimal Level of Advertising and Long-Run Equilibrium Relationship Between 
  Advertising and Profit: The Case Study of Iranian Sepah Bank,
    Journal of Economics Theory,
    Volume 6,Issue 4,
    2012,
    Pages 116-120,
    ISSN 1994-8212,
    jeth.2012.116.120,
    (https://makhillpublications.co/view-article.php?doi=jeth.2012.116.120)
    Abstract: The existence of a long-run equilibrium relationship between advertising expenditures and sales revenues or profits suggests that firm’s decisions to fix advertising as a ratio of performance index (Dorfman-Steiner condition) might represent optimal behaviour. This study attempts to provide evidence for such a relationship between advertising expenditures and profit using a sample of monthly time series data in Sepah Bank over the period 2002-2008. The results show the existence of long-run equilibrium relationships between the bank profitability and advertising expenditure in the sample period. This suggests that in long-run the bank's advertising expenditure is in optimal level. The evidence also bears out the hypothesis of existence a two-way causation between advertising expenditures and profit of Sepah Bank in long-run.
    Keywords: Bank;profitability;advertising intensity;Dorfman-Steiner condition;co-integration;Iran