Challenges and Practical Solutions for Determining Bank Interest Rate in Iranian Economy

This paper aims to examine challenges and practical solutions about determining bank interest rate in context of Iranian economy. Thus, survey and descriptive statistics have been used. The papersfindings indicate that central bank can draw on two scenarios: first, Central Bank can determine a reference interest rate in which receives deposit and give credit facilities. Banks, in turn, determine each bank´s interest rates following the endorsement by auditor in terms of domestic capacity, market potential, economic situation, expectations about the level of incomes as well as the percentage of interest that they can pay depositors According to second scenario, the central bank determines an interest rate for both long-term and mid-term currency exchange contract as well as an interest rate for deposits for the period from 1391 onwards in term of efficiency in relevant sectors