of the Impact of Trade and Financial Liberalization on Economic Growth and Financial Development in Iran

In this paper, we attempted to examine the impact of trade and financial liberalization on both real and financial sectors of the Iranian economy. We used a Vector Auto Regression (VAR) model to test our hypothesis. The result shows that trade liberalization plays an important role in the economic growth and financial development. However, financial liberalization has had negligible impact, indicating that if financial liberalization is to have its significant effects on the economy, the government has to provide pre-requisites and pre-conditions needed. Until then the country has to follow a prudential financial policy.