The effect of government credit intervention in banking system on growth of iran economy sectors (FMOLS Co-Integrating Approach)

In this study, the effect of government credit intervention in the banking system on the growth of Iran's economic sectors was investigated. For this purpose, the fully modified least squares model (FMOLS) was used. Also, research data were collected during the period of 1997-2007 from the Statistics Center of Iran, the Central Bank and specialized banks (Bank of Industry and Mines, Agriculture and Housing). The results showed that the variables of net capital stock of economic sectors and payment facilities of specialized banks to economic sectors have a strong positive and significant effect, the variables of employed population of economic sectors and the share of each specialized bank in the total banking system The average positive and significant effect of the variables of commercial openness and the state ownership index of banks has a weak positive and significant effect on the value added of economic sectors. Also, the variable of private ownership index of banks does not have a significant effect on value added of economic sectors. Also, the variable of private ownership index of banks does not have a significant effect on value added of economic sectors. Therefore, the most important result of the present study was that government credit intervention through specialized banks (industry and mining, agriculture and housing) has a significant impact on the economic growth of relevant sectors (industry, agriculture and construction). However, the state nature of banks and their non-share in the profits and losses of enterprises, especially in times of recession, has caused a weak effect of this type of ownership on the value added of economic sectors. Accordingly, the officials of the country's banking system were suggested to develop banks in order to become specialized in order to achieve economic growth in various sectors. Also, refine the approach of banks from recipients of interest on repayment of facilities to participants in the profits and losses of enterprises.