Dynamic analysis of economic factors affecting interest rates in Iran: Evidence from the post-Corona era

Document Type : Original Article

Authors

Bahare Bazargan ¹

ali cheshomi ²

mahdi khodaparast ³

¹ Department of Economics, Faculty of Economics and Administrative Sciences, Ferdowsi University of Mashhad

² Ferdowsi University of Mashhad

³ Department of Economics of Faculty of Economics and Administrative sciences, Mas

https://doi.org/10.22067/mfe.2024.90501.1464

Abstract

The interest rate is an important indicator for the economy that is affected by economic factors. Macroeconomic factors that reflect the state of the economy are important for the behavior of interest rates. In addition, major global shocks such as COVID-19 can also affect interest rates. Therefore, the aim of this study is to investigate the short-term and long-term effects of economic factors on the interbank interest rate in Iran with monthly data from March 2018 to March 2024 with the ARDL approach since the beginning of the epidemic and the period after that. Experimental findings showed that the exchange rate and oil price have a positive and significant effect on the interest rate in the long term during the corona and post-corona outbreak. The results show a negative and significant relationship between the consumer price index and the interest rate in the long term. In addition, the results indicate that there was no statistically significant relationship between GDP and liquidity with interest rates in the post-Corona era. The policy implications of this study provide important findings about the factors influencing interest rates in crisis situations.

Keywords

interbank interest rate

consumer price index

COVID-19

economic growth

Subjects

• Financial monetary economy

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