Estimation of Banksking Credit's Demand and Supply Functions in Iran

The observations in Iran’s banking credit market in recent years shows a disequilibrium in this market in the sense of inequality of the credit demand and supply. Hence Iin this studypaper, we in order to examinestudy the restricting factors leading to the disequilibrium condition in the Iranian market for bank’s ing credit market, the restricting factor will be determined during using the switching regression model for the period 1353-1383 (1974-2004). by the use of disequilibrium models (switching regression model) The results of our study show that thethat the variables " real banking interest rate", " real money supply ", " real banks banking reserves in central bank, " and " monetary base " have a significant relationship with credit supply. On the other handAlso, the estimation of credit demand shows a positive relationship between the lag of the real previous periods deposits and credit demand. The interesting point is the insignificant relationship between the credit demand and the banking banking interest rate in the study period, but. On the other side we note the a high significant relationship between supply and the bankinging interest rate. This shows implies that the restricting factor of in the credit market has beenis the supply side which was has always been less than the demand in the market. An e Estimation of the market clearing banking interest rates andin its comparisoning with the real observed interest rates in recent years, also confirms the result.