The Effect of Qarz-ol-Hassaneh Deposits on Liquidity and Inflation in Iran

Since one of the goals of the usury-free banking system is to provide working conditions and work facilities through interest-free loans, evaluating the performance of this parameter is of particular importance. The purpose of this research is to investigate the effect of Qarz al-Hasaneh deposits on liquidity and inflation in Iran. This research using the annual data of the Iran economy during the period 1991 to 2020 and with the using the autoregressive distributed lag (ARDL ) models done. According to the statistics of the Central Bank, the share of Qarz-ol-Hassaneh Deposits in total total deposits have increased from 4.18% in 1991 to 9.33% in 2020. The obtained results show that Qarz-ol-Hassaneh Deposits, in both the studied models, had a negative and significant effect on the amount of liquidity and inflation both in the short and long term.