Estimating the impact of banking system imbalance on the economic growth rate in Iran (ARDL approach)

Articles in Press

Authors

1 student

2 lu

3 Khu

10.30471/iee.2024.10436.2451

Abstract

The imbalance of the banking system, which is caused by the mismatch between assets and liabilities, has wide-ranging consequences, including the creation of excess liquidity. Liquidity creation and its management have been one of the most important challenges for the Iranian economy over the past decade. One of the destructive effects of liquidity is the ineffectiveness of economic policies. Therefore, it should be noted that despite the fact that policymakers introduce the goal of creating liquidity as achieving high economic growth, the way it is created and managed produces different results in the economy. Considering the above, it can be stated that the monetary authority will have the ability to control and manage liquidity to a great extent by using the tools at its disposal. Therefore, this study attempts to examine the effect of banking imbalance on the economic growth rate using available data related to the monetary base and the ARDL approach. The results of this study emphasize the dual effect of banking system imbalance on the economic growth rate of Iran. On the one hand, banks' debts to the central bank can serve as a source of financing for advancing projects and increasing production, but on the other hand, increasing these debts can lead to increased risk in the financial system and a decrease in the ability of banks to provide loans to various economic sectors. The imbalance between banks' assets and liabilities can also lead to financial crises by creating pressure on liquidity, which ultimately has a negative impact on economic growth.

Keywords

Journal of Economic Essays; an Islamic Approach

Articles in Press, Accepted Manuscript
Available Online from 04 December 2024

Files

Share

How to cite

Statistics