javad taherpoor; teymor mohammadi; reza fardi
Abstract
In Economic literature, different dimensions of financial development have been scrutinized. In this regard, what is important about bank-based financial systems is the distribution of loans and credits among different economic sectors. Actually, in non-competitive markets characterized by imperfect ...
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In Economic literature, different dimensions of financial development have been scrutinized. In this regard, what is important about bank-based financial systems is the distribution of loans and credits among different economic sectors. Actually, in non-competitive markets characterized by imperfect and incomplete information, any sort of distribution of credits and loans which is based on profit maximization for banks will not necessarily result in maximizing the collective interests of a country and it can even have adverse effects for the whole society. With regard to the issue described, this paper aims to study the role of distribution of credits and loans among different sectors on economic growth in Iran. To achieve this goal, we have used and analyzed time series data for the period 1984 to 2015 using Autoregressive Distributed Lag Model (ARDL). The findings of this paper show that the logarithmic coefficient of financial growth index (calculated as the ratio of total outstanding credits to GDP) is positive and significant in both short-term and long-term periods. This means that financial development plays a positive role in economic growth. On the other hand, the estimated coefficient for the ratio of loans allocated to production sectors to loans allocated to non-production sectors is also positive and significant in both short-term and long-term periods. This suggests that loans allocated to production sectors have a positive effect on economic growth. In fact, one can assert that although an increase in bank loans and credits (actually, the ratio of total outstanding loans and credits to GDP) has a positive effect on economic growth, the more these loans and credits are inclined towards production, the more the magnitude of economic growth being stimulated.
Mohammad Jelodar Mamaghani; Abdosadeh Neisy; Mahdi Goldani; Saeed Rahimian
Abstract
Recent decade was undoubtedly a uniqe one for the banking and financial sector in Iranian economy. Stock market index was breaking records now and then, new credit institutions were established one after another, and different banks were competing in raising their interest rates of deposits. Put this ...
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Recent decade was undoubtedly a uniqe one for the banking and financial sector in Iranian economy. Stock market index was breaking records now and then, new credit institutions were established one after another, and different banks were competing in raising their interest rates of deposits. Put this story alongside an unprecedented bubble in construction sector in years 2006 and 2007, and we can realize that real sectors of the economy, specially industry and agriculture, were in what circumstances. Whatever is our definition of development and whatever is our index for measuring it, we cannot deny the fact that the reliable development is the one which is balanced and can cause growth in all sectors in a homogeneous and proportional way. One of important factors in analysing the situation of these sectors, is the credit ranking and grading that they have been able to get based on their performance from banking and financial system. Therefore, measuring credit risk in these sectors can make a good impression on their performance for policy-makers in each sector and economist involved with the issue. In this paper, we are going to calculate and analyze credit risk in different sectors of Iranian economy, namely “industry”, “agriculture” and “services and housing” sectors by analysing companies accepted in Stock Exchange and OTC markets. Some of the results of this study are high volatility and declining credit risk in industry sector, high and growing volatility in services and housing sector, and low volatility but very high average and declining trend in agriculture sector.