The Factors Affecting the Distribution of Income in the Iranian Provinces of Iran with Emphasis on Qard al-Hasan Loans; A Bayesian Econometric Approach

In conventional economics, emphasis is laid on the impact of such factors like taxes, economic growth, inflation and financing on income distribution. In the literature of Islamic economics, in addition to the aforementioned important variables, Qard al-Hassan (interest-free) loan is considered as a means of decreasing inequality. Using the data collected from different Iranian provinces in the period from 1384 to 1390 and using Bayesian econometric approach, this study conducts a scientific investigation into the effect of interest-free loan and other factors on Gini coefficient (as the most important indicator of income distribution). According to the hypothesis of this research, Qard al-Hassan played a positive role in ensuring optimum income distribution in Iran in the above-mentioned period. The results of using a Bayesian model averaging (BMA) show that Qard al-Hassan deposits in the above-mentioned period has a negative correlation with Gini coefficient and it has improved the income distribution in Iran. The results also indicate that there is a reverse U form Kuznets hypothesis about the relationship between economic development and income distribution in the economy of Iran.