Monetary & Financial Economics

Abstract Economic growth, as one of the most important indicators of a country’s economic performance, reflects a sustained increase in the level of welfare and is influenced by a set of macroeconomic variables. The present study investigates the dynamic effects of foreign direct investment (FDI) and trade openness on economic growth and energy consumption in Iran over the time period from 1990 to 2023. The research methodology is based on the ARDL (Autoregressive Distributed Lag) approach, with the following variables under investigation: Gross Domestic Product (GDP), energy consumption, foreign direct investment, trade openness index, oil rents, inflation rate, and exchange rate. The main findings of the study indicate that foreign direct investment, the trade openness index, and oil rents have positive and statistically significant impacts on economic growth in both the long-run and short-run (with smaller coefficients in the short-run). Additionally, FDI and trade openness exert a stimulating (positive and significant) effect on energy consumption in the long-run, although this impact is weaker in the short-term. Control variables such as inflation rate and exchange rate also play a significant (negative and meaningful) role in determining the pattern of energy consumption. Based on these findings, it is recommended that attracting foreign capital and increasing trade openness should be considered among the key strategies for achieving sustainable economic growth and managing energy consumption in Iran. Policymakers should create an enabling environment for attracting foreign investment and facilitating international trade, while simultaneously placing energy consumption management programs on the agenda to strengthen economic growth.

Abstract Every organization needs a performance evaluation system to monitor its progress towards achieving its goals. The absence of such a system implies a lack of communication with the internal and external environment, which could lead to the organization's decline and eventual collapse. This study presents a performance evaluation method for banks, aimed at assessing their status and analyzing the relationships among performance evaluation components. First, performance evaluation criteria were identified using content analysis, and data from nine Iranian banks, including 14 performance ratios, were evaluated. After normalizing the data, fuzzy cognitive maps and particle swarm optimization algorithms were used to determine the weights of the performance indicators. The performance indicators were then estimated. Finally, the entropy weighting method was employed to calculate the performance score for each bank. The results showed that Pasargad and Mellat banks had the best performance during this period, while Dey and Eghtesad Novin banks demonstrated the weakest performance. The research also analyzed the interrelations among various indicators and identified the influence and susceptibility of each indicator in evaluating bank performance.

Abstract We witness a rapidly growing trend in banking data. By proper analysis of these data, a bank achieves sufficient insight for policy making and decisions at different management levels, which results in a more competitive advantage. Banks perform different data analyses and can be classified into different levels of data analysis maturity. Higher levels of data analysis maturity mean more efficient and effective use of data analysis. In this regard, one of the main challenges for the banks and achieving their business targets is how to enhance their data analytics maturity level. Therefore, having a suitable roadmap for step-by-step planning to reach a higher level of data analysis maturity and performing related activities is essential. This paper provides a comprehensive step by step process for developing a data analysis roadmap in the banking industry using T-Plan roadmap framework and in field experiments. The steps of this roadmap include initial planning, holding several workshops and meetings to identify business and market drivers, specifying current analytical needs, depicting desired analytical use cases, gap analysis, and finally, providing a roadmap for data analysis to implementation. Modeling the process of compiling the proposed road map helps the bank extract and prioritize projects and activities that are necessary for data analysis and are aligned with business goals and also increases the maturity level of data analysis.

Abstract Life insurance is recognized as a reliable indicator of economic development in many countries due to its essential role in ensuring financial security for households, increasing social welfare, and supporting productive investments. However, in Iran, the share of life insurance in the insurance industry portfolio is very limited, and its growth faces serious challenges. The aim of the present study is to design and explain the factors affecting the development of life insurance sales in Iran. For this purpose, first, using the meta-synthesis method, the findings of the studies were collected and categorized, and then using the three-round fuzzy Delphi technique, the opinions of insurance industry experts were extracted and a consensus was reached. The results showed that the development of life insurance sales is based on three key factors: individual factors including demographic, economic, and attitudinal characteristics of customers; insurance market factors such as sales channels, trust in the insurance company, financial sufficiency, and product innovation; and macroeconomic factors such as inflation rate, economic growth, per capita income, and unemployment level. The findings indicate that individual factors have the greatest impact on the demand side, insurance factors affect supply, and macroeconomic conditions affect both sides. Accordingly, it is recommended that insurance companies expand the share of life insurance by promoting product innovation, improving sales channels, and strengthening financial strength, while increasing customer confidence; policymakers can also provide the basis for increasing the penetration rate of life insurance in the country by controlling economic fluctuations and strengthening the insurance culture in society.

Abstract The outbreak of the COVID-19 virus at the end of 2019 led to complex economic problems and affected stock market transactions in various countries. This study employs the Generalized Method of Moments (GMM) system to investigate the Iran stock market's reaction to the COVID-19 pandemic during the period from 2019 to 2022. The study particularly focuses on the role of firm characteristics (total asset returns, liquidity volume, company size, financial leverage and social responsibility) in the relationship between Covid- 19 and stock return. The results indicate that contrary to expectations, the COVID-19 pandemic had a positive impact on the stock returns of selected companies during the study period. According to the findings, firm size did not significantly influence the relationship between stock returns and COVID-19 during the period under review, while the financial leverage of companies had a negative and significant effect on this relationship. Additionally, the findings illustrate that corporate social responsibility, total asset returns and company liquidity strengthened the positive relationship between the COVID-19 outbreak and stock returns during the period under investigation. The obtained results indicate that certain specific characteristics of companies can play a significant role in moderating the effects of global economic crises on their stock performance.

Abstract Abstract:
The global financial crisis has provided important lessons about its impacts and the ways to mitigate its consequences. It has prompted economists to reflect on their role in understanding and managing economic crises. Extensive research has also been conducted to identify weaknesses in economic policymaking. One of the key topics in this context is the examination of the factors influencing financial development, as an efficient financial system can prevent the transmission of negative effects from financial crises to national economies.
This paper first reviews the economic strategies adopted by Asian countries in the aftermath of the 2008 crisis and then analyzes the determinants of financial development in a selection of Southeast Asian countries during the period 1980–2021 using the Panel VAR technique. The estimation results indicate that the depth of financial institutions has been the most influential factor in the financial development of these countries. In addition, the findings suggest that economic growth in these countries, driven by economic freedom, has contributed to a higher level of financial development over the study period.
1. Introduction
Global financial crises—particularly the 2008 crisis—marked a turning point in modern economic history by exposing fundamental weaknesses in the international financial system. Triggered by high-risk policies, excessive reliance on financial credit, and regulatory shortcomings, the crisis quickly evolved into a global phenomenon with severe consequences for economies around the world. In response, governments and regulatory institutions, including those responsible for financial stability, implemented a series of reforms aimed at restoring trust and stabilizing financial markets. These measures, shaped by the lessons of the crisis, now serve as the foundation for regulatory policies in many countries.
This study investigates the macroprudential policies and strategies adopted by leading countries in the aftermath of the 2008 financial crisis. With a particular focus on the role of Southeast Asian countries in crisis management, the research analyzes how economic and financial instruments have been employed to enhance resilience and reduce systemic risks. Moreover, by evaluating the successful policy responses of these countries, the study offers practical and adaptable solutions for varying economic conditions. Subsequently, the paper specifically examines the determinants of financial development in a selection of Southeast Asian economies—including China, South Korea, Malaysia, Hong Kong, and Singapore—with an emphasis on the role of economic freedom. This analysis is conducted using a panel Vector Autoregression (Panel VAR) model over the period 1980–2021.
2. Literature
The 2008 financial crisis, one of the largest and most profound economic crises of the 21st century, had a significant impact on global economic stability. The collapse of major financial institutions and its widespread repercussions prompted policymakers and regulatory bodies to re-evaluate financial system structures. Structural weaknesses in the financial system, insufficient regulation, and ineffective risk management were among the key factors that accelerated the crisis. Furthermore, the complexity of financial instruments and the high interdependence among financial institutions intensified the severity of the crisis (Acharya & Richardson, 2009). In response to the post-crisis need for financial system reform, the Financial Stability Board (FSB) has played a central role in assessing risk management strategies and regulatory reforms. Based on its evaluations, six core areas have been identified to enhance global financial stability in the aftermath of the 2008 crisis—each offering a response to the challenges revealed by the crisis and serving as lessons for the future.
3. Methodology
This study employs a panel Vector Autoregression (VAR) model using panel data. Generally, VAR models treat variables as endogenous, allowing for the examination of impulse response functions. However, in some instances, variables can be treated as exogenous (Canova & Ciccarelli, 2013). In this research, the following variables are considered exogenous: the interaction term of economic growth and economic freedom, financial institutions’ access, depth, and efficiency, as well as financial markets’ access, depth, and efficiency. The financial development index—on which the study is centered—is treated as the endogenous and dependent variable. Additionally, the growth rates of all variables have been calculated and used in the model. The study period spans from 1980 to 2021, with annual data frequency. The selected region of study includes China, South Korea, Malaysia, Hong Kong, and Singapore—chosen for their notable performance in financial and economic indicators.
5. Result
Based on the model estimation results, the depth of financial institutions exerts the strongest positive impact on the financial development index in the selected countries. Following this, the efficiency of financial institutions also demonstrates a significant and positive effect on financial development throughout the study period. Moreover, given that one of the objectives of this paper is to examine the role of economic growth—mediated by economic freedom—on the financial development index, the findings indicate that lagged economic growth through the channel of economic freedom has a significant and positive effect on financial development in these countries. This result supports the empirical evidence presented in the paper, suggesting that the economic freedom strategies adopted by these countries—tailored to their specific economic development priorities—can serve as a positive contributing factor in enhancing the impact of economic growth on financial development.

Abstract This paper examines central bank interventions in the context of government debt sustainability, focusing on the inflation targeting model. Using quarterly data from 1989 to 2023 for Iran and countries with inflation targeting policies, this study examined the impact of central bank interventions on government debt sustainability in the context of inflation targeting using the Markov regime shift and policy evaluation (PSM) approach. The results of the Markov model showed that monetary interventions, such as increasing liquidity, reduce debt sustainability (debt-to-GDP ratio) and weaken the relationship between government spending and revenues. Gross domestic product had a positive effect (0.61 in the high-volatility regime and 0.98 in the low-volatility regime), and central bank independence (0.96 and 0.54), exchange rate (0.48 and 0.54), oil revenues (0.43 and 0.66), and tax revenues (0.78 and 0.67) had a negative effect on debt. Liquidity (0.53 and 0.65) and inflation (0.67 and 0.54) had positive effects, with a stronger effect in the low-volatility regime. The transition probability matrix also showed that the high-volatility regime (persistence probability 0.98) was more stable than the low-volatility regime (0.91), with an average of 3 quarters of high volatility and 1 quarter of low volatility. The PSM method with the logistic model confirmed that variables such as GDP, inflation, and central bank independence affect the probability of intervention, but interventions reduce debt sustainability.

Abstract This study examines the dynamics of equity exchange-traded funds (ETFs) returns in the Tehran Stock Exchange in response to shocks arising from economic uncertainty. To identify uncertainty shocks, the proxy SVAR approach is employed within the framework of Koley and Hansen (1989). Gold is used as a proxy for uncertainty shocks, relying on unexpected international events during the period 2013–2023 (1392–1402 in the Iranian calendar), with monthly data. Gold price fluctuations around these events are extracted and introduced into the model as a structural identification instrument. Within this framework, the impact of uncertainty shocks on ETF returns is analyzed alongside other macroeconomic variables, including the exchange rate, inflation, interbank interest rate, risk aversion, and investor sentiment.

The results indicate that uncertainty shocks lead to a significant and substantial decline in ETF returns, with the strongest impact occurring within a one- to three-month horizon. This decline is primarily driven by heightened risk aversion and reduced positive investor sentiment. The effects typically persist for up to six months, after which returns revert to their initial levels. These findings are consistent with international evidence and address the gap in domestic research regarding the behavioral response of ETFs to macroeconomic uncertainties. Accordingly, adopting policies aimed at enhancing information transparency, developing risk-hedging instruments, and strengthening investor confidence is essential to mitigate the adverse effects of uncertainty shocks on the capital market.

Abstract The aim of the present study was to investigate the distributional effects of monetary policies in the Iranian economy using the dynamic stochastic general equilibrium (DSGE) model. In this study, the distributional effects of monetary policy were investigated in the form of designing a dynamic stochastic general equilibrium model with heterogeneous households in terms of liquidity constraints and liquidity non-constraints. In this regard, statistical data for the period 1990-2024 were used. The financial asset channel is considered as one of the most important channels of monetary policy transmission to the real sector of the economy. Improving the distribution of income has always been an important goal that has been considered by political and economic policymakers. The results of the estimated model indicated that the monetary policy shock led to a worsening of income distribution among households. In addition, the shock increased the value of financial assets in households without liquidity constraints, and led to a decrease in consumption and income in households with liquidity constraints due to lack of access to financial markets and financial assets. Based on these results, it can be said that inappropriate monetary policies can exacerbate class gaps. Increased liquidity without proper control increases inflation and reduces the purchasing power of low-income groups, while holders of financial and capital assets (such as real estate and stocks) benefit from increased asset prices.

Abstract This study examines the structure and evolution of criminal protection of the monetary system in Iranian law, emphasizing its gradual transformation from regulatory safeguards to security-oriented responses. Employing a doctrinal–analytical methodology, the research analyzes statutory provisions, judicial interpretations, and institutional reforms governing the monetary and financial domains, particularly under the Monetary and Banking Law of 1972, the Non-Banking Financial Market Regulation Act of 2004, the Islamic Penal Code (Book V, 2013), and the Law on the Punishment of Disruptors of the Economic System (1990, as amended until 2021).
Findings indicate a three-tiered framework of criminal protection in Iranian monetary legislation: (1) Preliminary protection, characterized by mild criminal responses such as fines or short-term imprisonment for minor monetary or foreign exchange violations, primarily aimed at behavioral correction and maintenance of transactional order; (2) Intermediate deterrent protection, focused on safeguarding the credibility of legal payment instruments through criminalization of acts such as forgery, falsification, and counterfeiting of coins, banknotes, and negotiable instruments, with penalties ranging from one to ten years; and (3) Aggravated protection, where monetary offenses escalate into security-level crimes under the Law on Economic Disruptors, encompassing large-scale or system-threatening conduct—such as major currency smuggling or organized counterfeiting—punishable by long-term imprisonment, extensive confiscation of assets, or even capital punishment in cases constituting corruption on earth (efsad fel-arz).
The paper clarifies the conceptual ambiguity of “disruption” (ekhalal) by distinguishing between its behavioral and consequential dimensions. It argues that disruption must be assessed in terms of both mens rea (criminal intent) and the systemic impact on monetary stability, calling for quantitative criteria and expert-based evaluation. Institutionally, the 2023 Central Bank Act strengthens the supervisory and preventive capacities of the monetary authority by providing for specialized judicial and disciplinary mechanisms to address financial crimes.
The study concludes that the effectiveness of Iran’s criminal monetary policy hinges upon institutional coordination, preventive oversight, and a balanced distinction between economic and security rationales. Accordingly, it recommends: (1) joint issuance of operational guidelines by the Central Bank and the Judiciary to define measurable indicators of disruption; (2) amendment of Article 526 of the Islamic Penal Code to clearly differentiate “intent to disrupt” from “profit-seeking motivation”; (3) establishment of institutional monitoring mechanisms for high-risk monetary transactions; and (4) specialization of Revolutionary Courts to ensure interpretive consistency in monetary and foreign exchange offenses. Overall, the findings demonstrate that while Iran’s legal framework for the criminal protection of the monetary system is comprehensive, it still requires conceptual clarification, procedural standardization, and institutional integration to transition from reactive punishment to preventive governance in safeguarding monetary stability and public trust.

Abstract The monetary policy transmission mechanism is a central issue in macroeconomics and exhibits considerable heterogeneity across countries due to differences in institutional arrangements and structural characteristics. This study aims to examine the role of structural factors—namely financial structure, labor market stickiness, and industrial composition—in shaping the transmission of monetary policy in the selected countries over the period 2000–2022. To this end, a Panel Conditional Vector Autoregression (PCHVAR) model is employed to analyze the dynamic responses of macroeconomic variables to monetary policy shocks. The results indicate that a contractionary monetary policy leads to a decline in output and a temporary increase in inflation in the short run; however, these effects gradually diminish, and in the long run, evidence of relative monetary neutrality emerges. Nevertheless, the analysis of maximum eigenvalues and forecast error variance decomposition suggests that the structural stability of the economic system in response to shocks is weak and that shocks exhibit high persistence; therefore, the reliability of long-run interpretations is limited. From a policy perspective, the findings underscore the necessity of strengthening financial institutions, developing capital markets, enhancing labor market flexibility, and paying due attention to the industrial structure of the economy as key prerequisites for improving the effectiveness of monetary policy and reducing heterogeneity in its transmission mechanism.

Abstract Precious metals serve as safe-haven assets during economic crises, playing a pivotal role in the reallocation of capital from stock markets. Influenced by factors such as inflation, economic uncertainty, monetary policies, and geopolitical events, these metals exert either positive or negative effects on stock indices. This study aims to investigate the impact of gold and silver price volatility on the stock indices of selected Islamic countries over the period from 2006 to 2022. Employing a quantitative methodology grounded in econometric models, the research adopts a hybrid approach integrating quantile regression with wavelet transforms to analyze the distributional properties of variables across quantiles and temporal scales (short-term, medium-term, and long-term).
The findings reveal that fluctuations in gold and silver prices have a direct and statistically significant influence on the stock indices of the selected countries. Wavelet coherence analysis indicates an overall in-phase relationship among the variables: in the short term, stock indices exhibit leading behavior; in the medium term, gold and silver take the lead; and in the long term, correlations diminish. Quantile regression results highlight variations across wavelet scales, with D1 showing stronger effects in higher quantiles, D2 demonstrating greater stability, and D3 exhibiting weaker impacts. A similar pattern, albeit with reduced intensity, is observed for silver. Consequently, these volatility dynamics aid policymakers in formulating fiscal policies and assist investors in risk management. Recommendations include multi-scale analyses for forecasting, mitigating dependencies on price fluctuations, and developing novel financial instruments. This research addresses a gap in the literature on Islamic countries and introduces methodological innovations

Abstract Bank profitability is one of the key indicators of the soundness and resilience of the banking system, playing an important role in capital strengthening, shock absorption, and the continuity of financing for the economy. This study examines the non-linear effect of liquidity risk on the profitability of Iranian commercial banks. To this end, panel data for 12 banks listed on the Tehran Stock Exchange over the period 1382–1401 (2003–2022) are compiled, and return on assets (ROA) is used as the profitability measure. Liquidity risk is proxied by the ratio of total loans to total assets. In addition, credit risk, first differences of income diversification, the ratio of administrative expenses to assets, and bank size are included as control variables. After confirming cross-sectional dependence and applying the second-generation CIPS unit root test, the Panel Smooth Transition Regression (PSTR) model is employed to test for non-linearity. Linearity tests indicate that a simple linear specification cannot capture the behavior of liquidity risk, while a PSTR model with two thresholds and three regimes based on bank size provides a better fit. The results show that the effect of liquidity risk on profitability is negative and statistically significant for small and large banks, but positive for medium-sized banks; in other words, there exists an intermediate level of liquidity risk at which a more active use of liquidity capacity translates into higher profitability. Credit risk reduces ROA across all regimes, whereas changes in income diversification play a limited, mainly control role. Overall, the findings imply that prudential policies and liquidity risk management should be tailored to bank size, alongside simultaneous control of credit risk, to sustain bank profitability in Iran.