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This study examines the social cost of banking industry in Iran (17 governmental and private banks) in an unbalanced panel data model. To conduct estimations, two different approaches were taken: 1- Welfare Triangle approach 2- Libenstein’s approach. In the former, welfare triangle is measured assuming banking industry operating in full technical efficiency however, the latter includes both the effect of welfare triangle and the cost of likely technical X-inefficiency. The result of the first method showed that the social cost of banks in Iran is little, amounting to be less than 1 percent of GDP in 2008 while within the same period, the second method resulted in 4 percent of GDP, as the social cost of banks in Iran.

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The main purpose of this paper is to examine the effect of merger, concentration and credit risk on the efficiency of Iranian Banking industry. To measure the efficiency of Iranian banking system, we have used the data of commercial & specialized bank's balance sheets during 2001-2007, and a parametric approach to estimate two empirical models. To estimate efficiency measures and determining main factors affecting the measures, we have used a Logarithmic - Linear form of a random Translog cost function. The results of the first estimated efficiency model show that the average efficiency measure of banking system in Iran is 54% and that the merger of the more inefficient banks within the efficient bank will cause the average efficiency measure rise to 70% The results of the second model - assessing the effecting factors on efficiency- show that the efficiency of banks has an inverse relationship with the concentration (competition in banking industry), and a direct relationship with the IT index (e-banking activity) and the facilities to assets and capital to assets ratios (as the indices of the credit risk).

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Banks play an important role in many modern economies. The main functioning of banks is to reduce the information problems between lenders and borrowers. The experiences show that banks with a powerful balance-sheet have a better ability to isolate their lending activities from monetary shocks. So, the balance-sheet items of commercial banks play an important role in their sensitivity to the monetary downturns. This paper has two distinguishing features compared to other papers. First, we examined the indirect effects of monetary policy on bank lending through the balance-sheet items of the Iranian banks. Second, we have used two separate samples private and public banks, because their organizational systems have significant differences. Our hypothesis is that the monetary policy can indirectly affect the public and private banks’ lending through their balance-sheet items. Our results show that the monetary policy has no direct but indirect effects on bank lending in Iran.

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The aim of this paper is to consider the effects of monetary policy on production and prices through asset price channel (the housing price index) in Iran during 1368Q1 to 1387Q4. By Vector Error Correction (VEC) Model, the effect of monetary policy has been considered through this channel. In general, the results show that the debt of banks to the central bank as instruments of monetary policy through the housing price index, at least in the short run could increase the production level and decreases prices. Thus central bank with given facilities to banks can directly and through the housing price index strengthen production level and control prices in the short run. Also we found that shock of the required reserve ratio in general, directly affects production levels and don’t have any effect on production level and prices through the housing price index. Therefore, in using of these tool as instruments of monetary policy, the housing price index channel in monetary transmission policy, has a little effect and only on the production.

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The purpose of this paper is to investigate the source of fractional reserve banking and to review the literature on bank credit. Evaluating the operational procedure of this banking model demonstrates a new concept of credit money shaping aspect and its affect on the practical economy. The difference in due dates between depositing and receiving loan that causes Ex-nihio money to exist, the effect of this money on prices along with economic instability are among the issues that have occupied the critic scholar's minds in fractional reserve banking realm. In this paper, the effects of the fractional reserve banking model on the consumption behavior are analyzed. Also, the view points of the critics of this banking model are addressed. In this regard, an inter-generational consumption behavior model based on Maurice Allais's perspectives has developed. Results show that optimizing the existing model is the true test of the consumption instability in a permanent state in the fractional reserve banking realm. Also, according to the results there exits the possibility of instable capital repletion under certain circumstances.

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According to Taylor (1993) rule, the monetary authority responds to deviations of output and of inflation from their targets through nominal interest rate fluctuations regarded as policy instrument. Another specification that has received considerable attention is that policymakers may have asymmetric preferences with regard to their objectives during recessions and expansions. Since according to Law for Usury (Interest) Free Banking of Iran, the objective of the central bank is not the control of interest rate, instead it is money growth rate which is used as an instrument, in this study we introduce a money growth rate reaction function and we use it to test the asymmetry in central bank behavior during recessions and expansions. The estimation results of a Markov Switching model for the period 1367:1 to 1387:2 show that the central bank sensitivity toward output is more during the recessions while its sensitivity toward inflation is more during the expansions.

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There are a lot of techniques and methods for prediction of bankruptcy among them “Statistical methods” or econometrics techniques are more popular. As dependent variable in our study is qualitative it is convenient to use qualitative discrete models. Mixed Logit model is one of the powerful and flexible techniques of discrete choices that allow the coefficients to be random with distribution function. Explanatory variables are financial ratios which derived from Zmijewski’s model. The sample data are from Tehran Stock Exchange’s Brokerage Companies during 2001-2008. We selected two random samples, one for estimation and another for prediction power test. Results show that the degree of successfulness of the model is over 90 percent.

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Since the liquidity shortage has some undesirable consequences for banks, the evaluation of different strategies of providing liquidity is very important. In normal market conditions, there are plenty of adjustment strategies available for banks which allow them to have higher liquid assets when they face higher payment obligations. This paper mainly focuses on three strategies of liquidity management in country's banking system in above conditions. The main aim of current paper is to test three strategies of liquidity management based on the recommendations of Basel Committee in the condition of increasing the payment obligations of the banking network, by applying Generalized Method of Moments (GMM) method. We used the data from 20 Iranian commercial banks for the period 2001-2009. Results show that there is a positive relationship between payment obligations and securities stock growth rates and also between payment obligations and repayments of loans growth rates. However there is a diverse relation between payment obligations and long-term loans growth rates.

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The commitment and forward-looking behavior of central bank is of great importance. Commitment imposes less social costs on the central bank and the public. However, while there is wide agreement on the importance of commitment, there is much less consensus on how to implement commitment through targeting or instrumental rules. In this paper, we have estimated a basic New Keynesian model in Iran economy based on quarterly data over a sample period for 1990-2010. Then, we introduced a kind of instrumental rules that is called Speed Limit rule. The main feature of this rule is that the output gap is replaced by the changes in the output gap in the central bank's loss function. Then, by calculating appropriate weights under alternative targeting rules, we showed that this rule has the lowest social costs. Then, assuming the use of interest rate as primary monetary policy by the central bank, it is optimal to consider the role of the changes in the output gap (i.e. speed limit rule) in addition to the role of inflation and the output gap. As we expected, the estimation results of this instrumental rule in Iran economy showed that this rule has not been used for determining the interest rate. In other words, among the variables considered, only inflation rate has a positive and significant relationship with the interest rate, and the output gap and the changes in the output gap are not used in determining the interest rate.

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This article measures the market power in the loan and deposit markets in banking industry of Iran, including 10 state-owned and 4 private banks, during 1380-1389 (2001-2010) based on the evaluating of Lerner indices. To achieving this objective, a stochastic frontier cost function has been applied then market power was calculated. The main results of paper show over the observed period although market power in loan market has reduced, in deposit market it has increased. Outcome of calculations indicates some fluctuations in Lerner indices especially during (2005-10). So, it shows importance of economic policy aimed at removing the barriers of entry to market and regulation of them in order to make these markets more competitive.

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This paper based on the new empirical industrial organization model (NEIO) examines the impact of market concentration and cost efficiency on bank's profit rate margin in Iran. The study uses the model developed by Azzam (1997) to evaluate the market power and cost efficiency for 15 active banks in the banking industry. The empirical findings indicate a decrease in the market power of banks during the period 2001-2011. It is also shown that the conjectural variations index associated with the loans is -0.96, while demand for the loans is completely inelastic where its value is near to 0.087. Additionally, The market power and cost efficiency in the banking industry have been estimated 0.37 and -0.30 respectively meaning a decrease about 0.3 percent for the bank's profit rate due to the efficiency of cost and an increase about 0.07 percent due to the concentration.

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Financial institution as a non-bank financial institutions, institutions that are active in mediating funds in financial markets. Services are in many ways similar to the services provided by banks. Because the relationship between the development of non-bank financial institutions and Iranian gross domestic production (GDP) seem important. In this context, the main objective of this study was to investigate the effect of non-bank financial institutions in the areas of facilities of GDP contracts with other variables such as per capita GDP and employment effects on the labor force for the period 1999Q1-2013Q4. To estimate the Generalized Method of Moments (GMM) is used to model estimation results indicate a significant positive impact on the development of non-bank financial institutions and facilities with regard to Islamic contracts. The per capita income and employment variables have a significant positive impact on GDP respectively.