Investigating Multidimensional Spatial Patterns of the Relationship between Financial Stress and Financial Market Growth: A Hybrid MSPAHM Model Approach

Document Type : Research Paper

Authors

Department of Economics, Shi. C., Islamic Azad University, Shiraz, Iran.

Abstract

This study investigates the multidimensional spatial patterns characterizing the relationship between financial stress and financial market growth among companies listed on the Tehran Stock Exchange. The research incorporates three critical dimensions: spatial interdependencies, network structures, and inter-sectoral interactions. The analytical framework employs the innovative Multidimensional Spatial Panel Autoregressive Hybrid Model (MSPAHM), which facilitates simultaneous examination of temporal dynamics, spatial dependencies, and sectoral heterogeneity across the economic landscape. The empirical analysis encompasses a comprehensive dataset of Tehran Stock Exchange-listed companies spanning 2010 to 2024, capturing multiple economic cycles and policy regimes. The findings reveal that financial stress exerts a significant negative impact on firms' financial growth, with effects propagating through spatial spillover mechanisms to interconnected companies within the broader economic network. This transmission occurs across both direct and indirect channels, creating cascading effects throughout the market structure. Notably, the analysis identifies substantial sectoral variation in vulnerability patterns. Capital-intensive and import-dependent industries demonstrate heightened susceptibility to financial stress shocks, with effect magnitudes intensifying markedly during periods of economic sanctions and maximum pressure policies. These results underscore the dynamic and networked nature of financial stress, emphasizing its dependence on sectoral characteristics and temporal contexts. The study concludes that effective policy intervention requires adopting a systemic approach grounded in comprehensive network analysis, enabling policymakers to anticipate spillover effects and design targeted interventions that account for the interconnected nature of firm-level financial distress within the broader economic ecosystem.

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Main Subjects

Iranian Journal of Economic Studies
Volume 15, Issue 1 - Serial Number 29
Issue in Progress
2026
Pages 51-84

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History

  • Receive Date: 20 December 2025
  • Revise Date: 27 April 2026
  • Accept Date: 27 April 2026

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