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Financial Restraint and Financial Development in Iran: The Conditional Co-Integration Approach

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  • Taghipour Anoshirvan

    (The Economic Planning Department of Vice-Presidency for Strategic Planning and Control, Iran and University of Tehran)

Abstract

This paper aims to investigate empirically the effect of financial restraints on financial development in Iran over the period 1960–2005 by using the conditional co-integration method. In doing so, different hypotheses in terms of financial restraints and financial development in the context of the McKinnon/Shaw model and the monopoly bank model are addressed. The main results show that financial restraints had a negative effect on financial development. The finding indicates that monetary authorities in Iran used a severe financial repression policy because a mild repressive policy in a monopoly banking structure which is the case in Iran could have increased financial intermediation.

Suggested Citation

  • Taghipour Anoshirvan, 2009. "Financial Restraint and Financial Development in Iran: The Conditional Co-Integration Approach," Review of Middle East Economics and Finance, De Gruyter, vol. 5(2), pages 88-106, September.
    • Handle: RePEc:bpj:rmeecf:v:5:y:2009:i:2:n:5
    DOI: 10.2202/1475-3693.1200
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    Cited by:

    1. Shahchera , Mahshid, 2012. "The Impact of Liquidity on Iranian Bank Profitability," Journal of Money and Economy, Monetary and Banking Research Institute, Central Bank of the Islamic Republic of Iran, vol. 7(1), pages 139-160, October.
    2. Taghipour , Anoshirvan, 2012. "Banking Sector Policies and Financial Development: The Case of Iran," Journal of Money and Economy, Monetary and Banking Research Institute, Central Bank of the Islamic Republic of Iran, vol. 6(2), pages 35-49, December.
    3. Dehghan Nejad, Omid, 2010. "A Note on the Post-Revolution Iranian Economy and the Banking Sector," MPRA Paper 26766, University Library of Munich, Germany.

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