Original Article
Financial econometrics
Tohid Akbarzade; Mehdi Zeinali; yaghob porkarim; younes badavarnahandi
Abstract
A society relies on rational investors to invest because they are the custodians of society's wealth. However, rationality and predictability in decision making is an unattainable idea because decision makers may sometimes act irrationally. Behavioral economics and finance is a result of the achievements ...
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A society relies on rational investors to invest because they are the custodians of society's wealth. However, rationality and predictability in decision making is an unattainable idea because decision makers may sometimes act irrationally. Behavioral economics and finance is a result of the achievements of cognitive psychology in the field of human knowledge and the achievements of conventional economics in the field of knowledge of economic phenomena. Despite the distortions and sensory or perceptual errors of man, he is not and will not be able to choose and make decisions completely rationally and with ideal conditions. As a result, it is better to revise the assumptions of the unlimited source of rationality, will and selfishness in economics. The purpose of this article was to examine the role of irregularities in the decision making of investors in the country's capital market. In this study, a foundational data approach and statistical information collected from financial and economic experts in 1402 were used. The results obtained from this study indicated that the role of economic and financial components, market mechanism and executive functions, functions of institutions and financial and accounting components and the index of managerial and legal strategies in irregularities in capital decision making. It was 0.72, 0.55, 0.69 and 0.65 respectively.
Original Article
Financial monetary economy
Fariba Heydari; Kamran Nadri; Gholamali Haji
Abstract
Changes in housing prices can cause booms and Recession in the housing sector, the consequences of which affect the economy. Considering the importance of this issue, identifying the factors affecting housing prices can help policy makers and planners in formulating relevant policies. Focusing on this ...
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Changes in housing prices can cause booms and Recession in the housing sector, the consequences of which affect the economy. Considering the importance of this issue, identifying the factors affecting housing prices can help policy makers and planners in formulating relevant policies. Focusing on this goal, this research has examined a significant number of variables that are likely to affect the fluctuations of housing prices in the country..In this research, 24 variables affecting housing prices were included in the model, and finally, using the dynamic averaging model approach, the most important variables affecting housing prices were determined.Based on the results of dynamic averaging, the most important variables affecting housing prices in Iran's economy are inflation variables, exchange rate, liquidity, economic growth, banks' payment facilities for housing, outstanding claims and increase in bank debt, the amount of fixed assets of banks, land price index in Tehran, sanctions index, population, housing tax, urbanization coefficient and construction materials price index. Based on the results of the model, the variables of inflation, exchange rate, liquidity, banks' payment facilities for housing, the amount of fixed assets of banks, land price index in Tehran, sanctions index, population, urbanization coefficient and the price index of construction materials have a positive effect and economic growth variables, claims Delayed and increased bank debt and housing tax have a negative effect on housing prices.Based on the results of inflation, they have the highest percentage of variance decomposition and changes on the housing price variable; Also, based on the results of the TVP-VAR model, it was observed that the shock effect of selected effective variables on housing prices has increased in the last decade.
Original Article
Bank
Behrooz Shahmoradi; Leila Ghodratabadi; Hossein Sarin
Abstract
Nowadays, with the extensive growth of information technology and e-commerce, the use of electronic banking tools in various businesses has increased significantly. At the same time, considering the current problems of the country, such as inflation, unemployment, government budget deficit, etc., banks ...
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Nowadays, with the extensive growth of information technology and e-commerce, the use of electronic banking tools in various businesses has increased significantly. At the same time, considering the current problems of the country, such as inflation, unemployment, government budget deficit, etc., banks feel the need for banking business models in order to finance themselves. In this regard, the aim of the upcoming article is to develop a business model for the TOSE'E TA'AVON Bank in line with its digital banking. For that we interviewed fifteen managers and experts familiar with the Bank and digital banking. We then analyzed the thematic interviews, to extract the dimensions of the banking business model of the TOSE'E TA'AVON Bank. For the dimensions of the business model, 216 final codes were obtained through open coding, and 34 concepts were obtained by examining the identified codes and intra-case and inter-case analysis. These concepts expressed the 6 main dimensions of the Bank's business model in line with digital transformation. Finally, some suggestions were presented to operationalize the proposed model in TOSE'E TA'AVON Bank.
پژوهشی
Financial monetary economy
Abdorasoul Sadeghi; Farkhondeh Jabalameli; Aliasghar Heidari Zefreh
Abstract
1- IntroductionGiven the continuous budget deficit of government mainly coming from the lack of alternative financial resources for oil revenues, unstoppable upward trend of consumer price index, two-digit rates of unemployment, and as well as a non-independent Central Bank., money, Central Bank, and ...
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1- IntroductionGiven the continuous budget deficit of government mainly coming from the lack of alternative financial resources for oil revenues, unstoppable upward trend of consumer price index, two-digit rates of unemployment, and as well as a non-independent Central Bank., money, Central Bank, and its monetary policies have always been a challenging issue in the Iranian economy. Hence, this study assesses the cause of preferring discretionary monetary policy to rule-based monetary policy in Iran’s inflationary environment of economy. In addition, we are supposed to find out whether or not the insistence on discretionary monetary policies can realize Iran’s government’s interests. Ultimately, according to the results, policy implications are presented to adopt monetary policies so that the government, Central Bank, and the private sector reach better outcomes. 2- Theoretical Framework The question is whether policymakers can make a credible commitment to the private sector concerning the future monetary policy, so that they can set their price expectations based on monetary authority’s commitment? In response to this question, two types of discretionary and rule-based monetary policies have been formed. Discretionary monetary policy was first discussed by Simons due to considerable uncertainty arising from the 1930s deep economic recession (Glasner, 2017). In addition, the duality of discretionary monetary policy versus rule-based monetary policy was brought into discussion after the 1970s inflationary conditions (Dellas and Tavlas, 2022). In this regard, Simons considers predictability of monetary policy as a necessity for achieving stability and reducing uncertainty in an economy. Friedman also recommends rule-based policies to reduce uncertainty (Tryoshin, 2023).More prominently, this duality has always been a subject of debate after the studies of Kydland and Prescott (1977) as well as Barro and Gordon (1983), which was brought into discussion the time inconsistency issue of discretionary monetary policy. The rule-based or discretionary monetary policies can influence the private sector's price expectations, which affect the central bank's objectives of maintaining price stability and surging economic growth. Therefore, as pointed out by Jia (2023), it finds much important for the private sector to suitably predict monetary policy objectives to set their price expectations. Hence, the Central Bank's rule-based or discretionary policies can impact the adjustment of the private sector’s price expectations in line with the declared policies. Some believe that the Central Bank cannot bind itself to a fixed monetary rule over an extended period of time. This is why new conditions may arise in the future, requiring the adoption of a new monetary policy to address those conditions. Hence, committing monetary authority to a fixed rule does not align with the realities (Snowdon and Howard, 2013), i.e., monetary policies are adjusted according to the economic conditions of that period of time (Laureys and Meeks, 2018; De Paoli and Paustian, 2017).3-Methodology According to the theoretical foundations, and Kydland and Prescott (1977) as well as Barro and Gordon (1983), under the framework of microeconomics bases, Nash equilibrium, and mixed strategic games, and as well as taking into account the two players of Central Bank and private sector, the cause of preferring discretionary monetary policy to rule-based monetary policy is examined. In this concern, given some realities related to the Iranian economy, we consider some assumptions. First, there is considerable amount of uncertainty. Therefore, both players, the private sector and Central Bank, have no enough confidence in the strategies chosen by the opponent. Second, the private sector places more importance on purchasing power of wages. Considering the passivity of real wages of labors and following their purchasing power to the inflation volatility, originating from the rigidity of nominal wages on labor contracts, more weight is given to the inflation rate compared to the unemployment rate by the private sector.4- Results and Discussion The results show that the Central Bank dependence and its being passive against the fiscal policies of government, an untrusting atmosphere between the Central Bank and privet sector, stagnation situation and a low economic growth, nominal wages rigidity on job contracts, nominal interest rates repression, and continuous budget deficit have made the Central Bank and government intended to improve the employment and budget deficit situations by an unpredicted inflation resulting from discretionary monetary policy. The earnings indicate that the private sector is in knowledge of this reality, and thus the Central Bank is no more able to take advantage of discretionary policies to deceive the private sector for achieving the objectives pointed out above. More explicitly, an equilibrium is formed in which both players distrust each other, and they take this distrust into their making decisions. 5- conclusion and policy implicationsNot only the government, but also the private sector will not reach maximum earnings, and they both meet minimum earnings if the Central Bank keeps insisting on discretionary policies. Whereas they can both reach medium earnings, which is an optimal case, if the rule-based policies are followed. In this regard, the repression of nominal interest rates as well as the rigidity of nominal wages on job contracts have significantly motivated the Iranian government and Central bank to follow discretionary monetary policies. Because, all the government’s short-term benefits, resulting from discretionary policies, come from an unforeseen inflation that is not fully incorporated by the private sector’s price expectations. Iran’s government is aware of this economic reality, the rigidity of nominal wages on labor contracts, which can promote the employment growth by lowering the cost of real wages paid in the labor market. On the other hand, considering the repression of nominal interest rates that are not proportionally adjusted to the inflation rates, the real interest rates experience more decrease after a rise in inflation. Therefore, the cost of repaying the principal and interest rates of government’s issued bonds decreases, which improves the government's budget deficit. Thus, to change monetary policies from discretionary to rule-based policy, it is necessary to be moderated the factors motivating the government and Central Bank to pursue discretionary policies, including the rigidity of nominal wages on job contracts and the repression of nominal interest rates.
Original Article
Ahmadreza Saraf Jadidan; Mehdi Homayonfa; Sina Khordiar; Mehdi Fadaei
Abstract
The purpose of this research is to present an efficient model of government budget allocation to the provinces of the country with a combined approach. The current research is an applied-descriptive study of a quantitative type. The statistical community is documents related to budget allocation in the ...
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The purpose of this research is to present an efficient model of government budget allocation to the provinces of the country with a combined approach. The current research is an applied-descriptive study of a quantitative type. The statistical community is documents related to budget allocation in the budgeting system. Fuzzy AHP method was used to weight the factors affecting budgeting. For pairwise comparisons, the prepared questionnaire was provided to 10 experts. In order to prioritize the provinces for budget allocation, AHP and Fuzzy Vicor methods are used. Finally, a multi-objective fuzzy mathematical model is presented, which is solved by the whale algorithm. Also, the results of the multi-objective whale algorithm based on the Pareto archive are compared with the NSGA-II algorithm. The results indicate that Tehran province ranks first and Qom province ranks last in terms of importance for budget allocation. After weighting- Determining the factors and provinces using fuzzy AHP and fuzzy Vicor techniques, the fuzzy multi-objective model of budget allocation for the data of the year 1400 was solved using the proposed whale algorithms and NSGA-II, and the results of the two algorithms and the corresponding values of the documents and The provincial budgeting documents were compared in the program and budget organization, and the results showed that for budget allocation in 1400, the current research model responded to the demand with a lower budget. The comparison of the results of the two algorithms, Nahang and NSGA-II, for the provincial budget of 1400 shows that for the entire budget of the country, the total budget allocated by the NSGA-II algorithm in 1400 is more than the total budget allocated. It is by the whale algorithm.
Original Article
Financial Economics
faramarz tahmasebi; alireza tamizi
Abstract
IntroductionHarry Markowitz’s portfolio selection theory is the pioneer of new theories (Markowitz, 1952). Markowitz’s mean-variance analysis is the most common method to solve the asset selection problem. In this method, the variance of asset returns is the only criterion for risk assessment. ...
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IntroductionHarry Markowitz’s portfolio selection theory is the pioneer of new theories (Markowitz, 1952). Markowitz’s mean-variance analysis is the most common method to solve the asset selection problem. In this method, the variance of asset returns is the only criterion for risk assessment. Unfavorable risks and their measurement are considered in the new financial theories about risk. Value at risk (VaR) is one of the most commonly used indicators in this field (Jorion, 1997, 2000). For the first time, Bamol (1963) proposed the concept of VaR as a new model for risk assessment (Alexander and Baptistab, 2002). But since the early 1990s, it has been widely used as a tool to assess risk. Hanifi (2010), in his first research on the model of VaR in Iran, calculated and compared VaR of different companies in Iran and several foreign countries. In the conducted studies, the portfolio risk of joint-stock companies was calculated by the VaR approach and using different models. The research results were compared with the variance criterion in some of these studies (i.e. a research by Karimi). Financial markets are among the most important and influential markets of any country. Stock market is considered as one of the important components of financial markets. On the other hand, stock asset is one of the important components of people's asset portfolio; its price usually changes due to the economic fluctuations. It is believed that the demand for maintaining other assets will be influenced by changing the return in one of the components of the asset portfolio; therefore, the people's asset portfolio composition will be changed. In this study, the effect of changes in the stock market returns on the people’s asset portfolio composition was condsidered by using the VaR criterion and the mean-VaR model in different periods of the stock market.Theoretical frameworkIn general, two theories are considered more in the literature of financial economics and topics on optimal portfolio determination; Modern portfolio theory and ultra-modern portfolio theory. Optimal asset allocation and optimal portfolio recognition are done according to the optimization based on the mean and variance of asset returns in modern portfolio theory, which was first introduced by Markowitz. Markowitz's mean-variance model, based on a specific level of return rates, obtains optimal values of risk based on minimizing the variance of the total assets in the portfolio (Markowitz, 1952)In another theory, optimal asset allocation and optimal portfolio recognition are done based on the relationship between return and unfavorable risk criteria. Ultra-modern portfolio theories explain the behavior of investors and portfolio selection based on the relationship between return and unfavorable risk. In this theory, unfavorable risk (fluctuations lower than the investor's target rate of return) is defined as a risk measurement index. From the viewpoint of the theory, risk as an emotional status is more representative of the fear of an unfavorable event such as loss or less performance than expectations or lack of access to the desired goal. So, unfavorable risk measures can explain it mathematically in a better way (Adami, 2012). Value at risk (VaR) is one of these measures. The risk of assets is calculated using VaR approach in the Mean-VaR model and it is used in the model.Research Methodology The study’s population was consisted of the price of assets, such as land, housing, gold coins, currency, stocks, bonds and bank deposits. These assets’ prices were extracted from the website of Iranian Central Bank and Statistics Center from 1991 to 2021. Then, the return and standard deviation of return on assets were calculated and used in the study. Dickey-Fuller test was used to review the stationarity of time series. Most macroeconomic variables are correlated of the first degree (integrated of 1). It is expected that data to be fixed after one time differentiation. Since the data used in this study is in the form of growth rate, it is expected that the data to be fixed. The results indicated that all the data are fixed as expectations. In order to conduct the research, after calculating the return, expected return and correlation coefficients of return on assets by Markowitz model, the asset risk with the 95% confidence level and the short-term (one-year), medium-term (10-year) and long-term (30-year) time horizons. year) were estimated using the VaR model (parametric method). Statistical calculations were performed and the results were extracted by using mean-VaR model.ConclusionIn order to select the optimal portfolio, the results of the statistical analysis indicated that the asset portfolio composition is changed due to the change in the ratio of return to risk during the entire period with respect to different time horizons. People's asset portfolio mostly includes stocks and housing during the period when stock returns are positive. Although there is a very high risk for investing in stocks, but it has a high share in people's investment portfolio due to the higher risk-return ratio in this period. At the same time as the stock returns become negative, a most change is occured in asset portfolio composition. So that stocks are completely removed from people's portfolios and are replaced by bonds and bank deposits. Under this condition, the entire asset portfolio almost consistes of the bonds and bank deposits in the short-term period.These two assets, in addition to low risk, have consistent returns for investors. The results represented that the change in stock returns lead to changing the asset portfolio composition in different periods. Since there is not a study to investigate and determine the people’s asset portfolio composition in different conditions of the stock market, it is not possible to compare this study’s results with other studies
Original Article
Financial Economics
Habib Ansari Samani; dariush Fareed; golnazosadat alavi nasab; farzaneh jandaghi
Abstract
In the past two years, the Tehran Stock Exchange has experienced severe fluctuations and a significant decline due to various factors. One of the important factors is the herding behavior of investors, Investors in the Tehran Stock Exchange exhibit emotional and sometimes irrational behaviors towards ...
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In the past two years, the Tehran Stock Exchange has experienced severe fluctuations and a significant decline due to various factors. One of the important factors is the herding behavior of investors, Investors in the Tehran Stock Exchange exhibit emotional and sometimes irrational behaviors towards buying and selling orders as well as market growth and recession, which can lead to herding behavior. Therefore, the aim of this study is to investigate the effect of herding behavior of investors on stock price fluctuations and industry indices. The target population of the study is all active and accepted companies in the Tehran Stock Exchange whose shares have been traded from 2015 to 2021, and a sample of 156 companies has been selected from among 18 industries using systematic elimination method. In order to collect the required financial data and information, reported data from financial statements and audited financial statements of listed companies for a period of 7 years have been used and analyzed. Various statistical tests such as Limmer and Haseman F-test, Breusch-Pagan test, and panel data test have been used for inferential analysis of variables, and the results have been estimated using time series regression models and panel data, indicating that the herding behavior of investors has a significant impact on stock price fluctuations and industry indices. Additionally, these emotional behaviors and decision-making of investors can lead to increased volatility of returns and market instability.
Original Article
Bank
Komeil Ali Taghavi; Mohammadreza Mashayekh
Abstract
‘Blockchain banking’ combines traditional banking features with cryptocurrency ones, which can be provided by merging ‘hybrid e-wallet’ with ‘bank account’ and ‘bank card’ - altogether as ‘crypto bank account’. The ‘hybrid e-wallet’ ...
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‘Blockchain banking’ combines traditional banking features with cryptocurrency ones, which can be provided by merging ‘hybrid e-wallet’ with ‘bank account’ and ‘bank card’ - altogether as ‘crypto bank account’. The ‘hybrid e-wallet’ is a form of mobile e-wallet on blockchain that supports both cryptocurrencies and traditional currencies in the same platform by which the purchase and sale of cryptocurrencies are possible. The crypto ‘bank card’ allows customers to exchange cryptocurrencies into currencies (e.g., Euro, Dollar, etc) and spend currencies in stores and online, and withdraw funds from any ATM worldwide. Therefore, the ‘sub-processes’ of ‘blockchain banking’ as a ‘business process’ were initially extracted by means of the ‘Delphi method’ applying Parsian Bank’s experts and the ‘sequence’ (i.e. the priority) of these sub-processes was determined via the ‘analytic hierarchy process’ (AHP). And eventually, Parsian Bank's maturity levels for all sub-processes and the overall maturity level for the process of ‘blockchain banking’ were specified on the basis of the ‘Capability Maturity Model Integration’ Version 1.3 (‘CMMI’ V1.3) in order for business process management (BPM).
Original Article
Financial monetary economy
mahdieh rezagholizadeh; Morteza Abdolhosseini; Hossein Jafari
Abstract
Considering that the macro-decisions of the central bank of any country can affect the capital market of country, in this study, the effect of central bank independence on the performance of the stock exchange in a selection of countries is investigated. These countries divided into two groups of developed ...
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Considering that the macro-decisions of the central bank of any country can affect the capital market of country, in this study, the effect of central bank independence on the performance of the stock exchange in a selection of countries is investigated. These countries divided into two groups of developed and developing countries based on the FTSE Russell classification about their stock market value. The estimation of the research model is done using the method of generalized method of moments (GMM) and during the period of 2000-2017. The results of the model estimation show that the independence of the central bank has had a positive effect on the performance of the stock exchange in both groups of developed and developing countries.Considering that the macro-decisions of the central bank of any country can affect the capital market of country, in this study, the effect of central bank independence on the performance of the stock exchange in a selection of countries is investigated. These countries divided into two groups of developed and developing countries based on the FTSE Russell classification about their stock market value. The estimation of the research model is done using the method of generalized method of moments (GMM) and during the period of 2000-2017. The results of the model estimation show that the independence of the central bank has had a positive effect on the performance of the stock exchange in both groups of developed and developing countries.
Original Article
Capital markets
yazdan gudarzi farahani; Mansour Haghtalab; ghazal ghalvazi
Abstract
Capital structure has been one of the most important topics in modern financial theory. Financial resources can have both short-term and long-term effects on financial performance. The timing theory of the company market based on the stock price has specified the time of stock release. When the ratio ...
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Capital structure has been one of the most important topics in modern financial theory. Financial resources can have both short-term and long-term effects on financial performance. The timing theory of the company market based on the stock price has specified the time of stock release. When the ratio of the market value to the book value of the company's shares is high, the management has issued shares. The purpose of this paper was to investigate the role of stock market timing theory on capital structure. Therefore, for this purpose, the effect of the company's past market values, fixed assets ratio, profitability and company size on the capital structure index has been evaluated. In this regard, statistical information has been used in the period of 2013-2021 and panel data method. The statistical sample of the research included companies active in the electricity industry and power plants. In this study, the capital structure of the company is considered based on the ratio of equity and changes. The results obtained from three fitted regression models show that the company's past values (the ratio of market value to book value) had a negative and significant effect on the capital structure, capital structure changes and share issuance. According to the obtained results, it is suggested that due to the dependence of the capital structure of the companies active in the electricity industry on the ratio of debt and bank financing, long-term and short-term planning in the financial sector of the company through the analysis of the market value of the company and Also, the profitability of the company should be done.
Original Article
Financial monetary economy
Lale Mushtakhi; narges samadpoor
Abstract
INTRODUCTIONThe role of the financial system on economic development has attracted and received increased attention from both academia and policy makers, with resulting divergent views emerging. Over the past decades, focus on this area has increased, with mixed findings which remains a theoretical and ...
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INTRODUCTIONThe role of the financial system on economic development has attracted and received increased attention from both academia and policy makers, with resulting divergent views emerging. Over the past decades, focus on this area has increased, with mixed findings which remains a theoretical and empirical controversy. Financial development has played a leading role in many developing economies (Puatwoe and Piabuo , 2017). There is a widespread believe among policy makers that financial development enhances productivity which promotes growth. There are a few key findings from the analysis of how financial development affects economic growth. The first is through the savings rate that leads to investment and capital accumulation, and the second is through channel allocation, in which financial development can increase efficient investment allocations thereby increasing productivity .(Ikhsan1 and Satrianto,2023)But the situation in developing countries is different. Some studies argue that the financial sector stimulates economic growth, while others argue the opposite (Sulemana and Dramani, 2020). The study (Adusei, 2013) also shows evidence that financial development undermines economic growth and is an anti-growth factor. There are also few studies that state that financial development has no effect on economic growth. These studies provide evidence in support of this. They provide the concept that financial development and economic growth are not related and are two separate phenomena that are independent from each other (Yıldırım, S., Özdemir, BK., and Doğan, B., 2013).All these different views are sufficient reasons to examine The effect of financial development indicators on economic growth in IranThe purpose of this research is to investigate the long-term and short-term effects of financial development indicators (financial efficiency and financial depth) on economic growth in Iran.2- THEORETICAL FRAMEWORKSome previous studies (Bittencourt, 2012; Estrada, Park, & Ramayandi, 2010; Hassan, Sanchez, & Yu, 2011; Škare, Sinković, & Porada-Rochoń, 2019) have indicated that financial development can affect economic growth by performing the function of financial intermediaries so that the distribution of financial resources can be absorbed by the productive sector. Other studies (Moyo & Le Roux, 2020; Petkovski & Kjosevski, 2014) provide evidence that financial development has a negative influence and has not been able to play a role in economic growth. IkhsanSome studies show that developing countries mostly report the negative impact of financial development on economic growth, which can be caused by specific characteristics, principled framework and management issues.Some studies (Bloch and Tang 2003., Ram and Andersen 1999., & Tang and Trap 2003.( also provide evidence in support of the concept that financial development and economic growth are not related and are two separate phenomena that are independent of each other (Bloch and Tang 2003, Ram and Andersen 1999, & Trap).Therefore, the results that have been provided over time about this relationship have been inconclusive and only three main results have been obtained from these studies: positive, negative and lack of influence.According to the results of the study (Bakar and Sulong, 2018), the impact of financial development on economic growth depends on the choice of time frame, the sample of countries, the list of variables, the choice of different indicators and even econometric methods. 3- METHODOLOGYIn order to investigate the long-term and short-term effects of capital efficiency and financial depth on economic growth, this research utilises the newly proposed autoregressive distributive lag (ARDL) approach which was developed and introduced by Pesaran and Shin (1995 and 1998), Pesaran et al.The analysis using the ARDL method is based on the interpretation of three equations: dynamic equation, long-term equation and error correction. Before estimating the model, default tests of unit root, homogeneity and determination of optimal interval should be performed4- RESULTS & DISCUSSIONUsing the ARDL technique, it was found that there is a positive short-term relationship between liquidity volume and economic growth and a similar negative short-term relationship between banking system deposits and economic growth. But in the long run, the banking system's deposits have a positive and significant effect on economic growth. While the effect of liquidity on economic growth in the long run is negative. Also, private sector credit as an indicator of financial efficiency, both in the long run and in the short run, has no significant effect on economic growth5- CONCLUSIONS & SUGGESTIONSThe impact of financial development on economic growth is one of the most important channels in economic matters, which has attracted many debates and controversies, but the results of research related to the impact of financial development indicators on economic growth are theoretically and empirically different from each other.All these different views are sufficient reasons to examine the effect of financial development indicators (financial efficiency and financial depth) on economic growth in Iran.Therefore, in this study, the long-term and short-term effects of financial efficiency indicators and financial depth on economic growth in Iran's economy during the period from 1983 to 2021 were investigated in a time series.According to the results obtained from the research, it can be stated that: The volume of liquidity can lead to economic growth if it can provide a suitable basis for the optimal allocation of resources and increase capital efficiency.Savings can be important as one of the sources of economic growth in the long term, but it cannot be considered as the cause of economic growth in Iran in the short term.Simply granting facilities to the private sector cannot guarantee financial efficiency, but the way these resources are used and spent is in the direction of economic growth and development, which will show financial development.
Original Article
Financial monetary economy
Yaser Moomivand; seyyd mohammadbagher najafi; Kaveh Derakhshani Darabi; jamal fathollahi
Abstract
Monetary policies are one of the most important policy tools for improving economicvariables, including inflation and production. Monetary policy is currently a dynamic andchallenging field of economic sciences, theoretically and empirically. The views on the effectof monetary policy on production vary ...
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Monetary policies are one of the most important policy tools for improving economicvariables, including inflation and production. Monetary policy is currently a dynamic andchallenging field of economic sciences, theoretically and empirically. The views on the effectof monetary policy on production vary from the ineffectiveness and neutrality of money inthe short and long term to the effectiveness of monetary policy and its effect on production inthe long term and even in the short term.2. Review of the literatureInstitutional aspects and their effect on economic variables and the economic performance ofdifferent societies have been attracted by experts in the field since the 1980s and led to thedevelopment and expansion of its literature in the 1990s. Moreover, the valuable works ofNorth and Coase, as well as, winning the Nobel Prize in Economic Sciences for their effortsto introduce institutional analyses put forward institutionalism as one of the leading economictheories. According to this literature, it can be stated that the same impulses and policies canbe followed by different reactions due to temporal and spatial differences in the institutionalenvironment in which they happened (Dehghan Monshadi, 2019).2.1. The effect of governance on the effectiveness of policiesThe new economic literature emphasizes the importance of institutions and governanceconditions in the economic development process and the performance of economic policies.Governance has a long history and has been defined in different ways. It literally meansdomination, ruling, and strategic government, but it means the activity of countrymanagement and control of a company or organization in the Oxford English Dictionary(Gholipoor, 2004).3. Materials and methodsThis research investigated the effect of variables on the effectiveness of monetary policyusing the model introduced by De Mendonça and Nascimento (2018), which is presented asRelation (1).(1)where is the index obtained for the effectiveness of the monetary policy in the i th country inthe t th year, GGI is the index of good governance, and X is other economic variables affectingthe effectiveness of the monetary policy, such as the degree of openness of the economy, thedevelopment of financial markets, and virtual variable of the existence of the inflationtargeting policy in the relevant country. In the years with the inflation targeting policy, thevalue was set to 1, but it was 0 in other years. In addition, the GDP variable was included inthe model to include other variables affecting the effectiveness of monetary policy.4. ResultsThe effectiveness index of monetary policy was calculated for the sample countries beforeestimating the coefficients using the proposed approach. This research calculated theeffectiveness of monetary policy using the approach introduced by Krause and Rioja (2006).In this approach, and were calculated for the selected countries in each year. The inflationdeviation was measured by the deviation of the consumer price index. Analysis of thedescriptive statistics for the research variables demonstrated that this index average for thecountries in the period under study was 2980.43 and the median equaled 1.48. It should benoted that the lower the value of the index, the more effective the policy would be in thereduction of inflation and production fluctuations. The highest and lowest index value was873575.4 and -107.91, respectively. Jarque- Bera statistic and its significance level alsoshowed that the distribution of the variable is not normal.5. ConclusionAs shown by the results of earlier studies and the present research, the process of selection,decision-making, and performance of individuals and societies takes place within theframework of institutions. Thus, their reaction to various phenomena, including economicand monetary policies, depends on institutions. One of the major institutions is thegovernance that affects economic variables with monetary and financial policies. Therefore,the primary objective of this research was to determine the effect of governance quality onthe effectiveness of monetary policy. According to the results, improving the quality ofgovernance significantly reduced production and inflation fluctuations and enhanced theeffectiveness of monetary policy. Hence, it could be concluded that in societies withfavorable governance indicators, better and more complete implementation of laws andregulations could be expected, and formal and informal obstacles to implement economicpolicies are reduced. The results obtained from the estimation of coefficients indicated asignificant relationship between the inflation targeting policy and the increased effectivenessof monetary policy. The existence of inflation-targeting policy and its obligation make thecentral bank focus more on the main goals of monetary policy, which is to maintain the valueof the national currency and increase economic stability. Under such circumstances, thepolicy-maker can have more authority in controlling inflation and production fluctuationsrather than other secondary goals, resulting in more success in controlling inflation andproduction fluctuations.
