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Social Capital and Financial Development: New Evidences from Iran (1983-2012)

Author

Listed:
  • Mahmood Yahyazadehfar

    (Department of Economics, University of Mazandaran, Babolsar, Iran.)

  • Amir Mansour Tehranchian

    (Department of Economics, University of Mazandaran, Babolsar, Iran.)

  • Mahyar Hami

    (Business Administration,Mazandaran University of Science & Technology, Babol, Iran.)

Abstract

The aim of this paper is to examine the causal relationship between social capital and financial development in Iran emphasizing long-run relations during 1983-2012. To do so, we used the number of annual judicial cases in public courts per thousand individuals as an inverse indicator of social capital and the ratio of bank claims on the private sector to nominal GDP to measure financial development. Then we applied Vector Error Correction Model to estimate the proposed model. The results show that the inverse indicator of social capital has a negatively significant impact on financial development and there is a one-way causal relationship from social capital to financial development in Iran during the observation period.

Suggested Citation

  • Mahmood Yahyazadehfar & Amir Mansour Tehranchian & Mahyar Hami, 2014. "Social Capital and Financial Development: New Evidences from Iran (1983-2012)," Iranian Economic Review (IER), Faculty of Economics,University of Tehran.Tehran,Iran, vol. 18(1), pages 117-129, Winter.
    • Handle: RePEc:eut:journl:v:18:y:2014:i:1:p:117
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    References listed on IDEAS

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    1. Niclas Berggren & Mikael Elinder & Henrik Jordahl, 2008. "Trust and growth: a shaky relationship," Empirical Economics, Springer, vol. 35(2), pages 251-274, September.
    2. Dearmon, Jacob & Grier, Kevin, 2009. "Trust and development," Journal of Economic Behavior & Organization, Elsevier, vol. 71(2), pages 210-220, August.
    3. Chou, Yuan K., 2006. "Three simple models of social capital and economic growth," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 35(5), pages 889-912, October.
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