Analyzing the impact of banking imbalance on Iran's economic welfare

Articles in Press

Document Type : Research Paper

Authors

1 Associate Professor in Energy Economics, Faculty of Economics and Administrative Sciences, University of Mazandaran, Babolsar, Iran

2 PhD. Student in Economics, Faculty of Economics, University of Allameh Tabatabai, Tehran, Iran

Abstract

Objective: Considering the dependence of the economy on banks as the most important source of financing the firms, the performance of the banking system has an impact on the economy. The performance of the banking system can usually be checked with its balance sheet. This research seeks to investigate the fact that when this important financial statement is unbalanced, how the economic welfare is affected.

Methods: Considering the importance of this issue, in the present study, using the Autoregressive Distributed Lags approach, the effect of banking imbalance on economic welfare during the period of 1978 to 2022 has been estimated in two formats. In the first form, the growth of the banks' debt to the central bank is used as a banking imbalance, and in the second form, the growth of the government's debt to the central bank is used to strengthen the results. To calculate economic welfare, the Index of Economic Well-Being is used.

Results: The moving trend of the economic welfare index shows that it fluctuates during the period under review and has an average of 26.40; Also, the growth trends of the banks' debt to the central bank and the growth of the government's debt to the central bank, as indicators of banking imbalance, fluctuate and have an average of 1.29 and -3.56, respectively. The long-term estimation results show the negative effect of banking imbalance (based on both indicators) on economic welfare. Also, per capita income and ...

Keywords

Main Subjects

Quarterly Journal of Applied Theories of Economics

Articles in Press, Accepted Manuscript
Available Online from 20 August 2025

Files

Share

How to cite

Statistics