:: Volume 11, Issue 2 (Spring 2016) ::
J. Mon. Ec. 2016, 11(2): 135-152 Back to browse issues page
Bank Lending Behaviour over the Business Cycle in Iran
Roohollah Zare *
Department of Economics, Beyza Branch, Islamic Azad University, Beyza, Iran
Abstract:   (1120 Views)

This paper studies bank loans over the business cycles in Iran to determine the role of Iranian banks in stabilizing credit. By estimating the long-run relations using dynamic OLS and fully modified OLS estimators, the findings show that real bank lending is positively related to real GDP in the long-run providing evidences of the pro-cyclicality of bank lending in Iran. Hence, Iranian banking system has not operated far away from the conventional banking system in that they have not the ability to stabilize credit over business cycles. The results of Toda-Yamamoto’s (1995) Granger non-causality test indicate a unidirectional causality running from real GDP to real bank lending. Moreover, the impulse response functions from estimating vector autoregressive models suggest positive and statistically significant response of real bank lending to shocks from real GDP reaffirming the pro-cyclicality of bank lending in Iran.

JEL Classification: C22, E32, G21


Keywords: Islamic Banking System, Bank Loans, Business Cycles, Iran
Full-Text [PDF 275 kb]   (443 Downloads)    
Type of Study: Research | Subject: Economics
Received: 2018/06/12 | Accepted: 2018/06/12 | Published: 2018/06/12

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Volume 11, Issue 2 (Spring 2016) Back to browse issues page