TY  - JOUR
T1  - The Optimal Level of Advertising and Long-Run Equilibrium Relationship Between 
  Advertising and Profit: The Case Study of Iranian Sepah Bank
AU - Kordbacheh, Hamid AU - Mehregan, Nader AU - Soltani Nasrabadi, Mina 
JO  - Journal of Economics Theory
VL  - 6
IS  - 4
SP  - 116
EP  - 120
PY  - 2012
DA  - 2001/08/19
SN  - 1994-8212
DO  - jeth.2012.116.120
UR  - https://makhillpublications.co/view-article.php?doi=jeth.2012.116.120
KW  - Bank
KW  -profitability
KW  -advertising intensity
KW  -Dorfman-Steiner condition
KW  -co-integration
KW  -Iran
AB  - 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.
ER  -