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The Relationship betweenFinancial Repression and Financial Depth (Case study of Iran)

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  • Safdari Mehdi

Abstract

Financial repression introduced early decade 1970 by McKinnon (1988) and Shaw (1973) that represented limits created by governments on monetary and financial system and had a negative impact on financial markets but in some countries, financial repression has had a positive effect on the financial markets. Iran is among the countries that knows necessary suppression of the financing for the economy and of decade 1350 until now is applied many restrictions on the financial markets. In this article we use the econometric methodology "regression to the wide distribution breaks» (ARDL) are paid to analyze the relationship between financial depth and financial suppression of in India for the period 1976-2006 the result of this research has been the negative impact of financial suppression of on financial depth variable and if the government does not limit the financial markets, increased financial depth and can be useful for the economy. Due to error correction model (ECM) we confirm long-term relationship between variables and using the test (CUSUM, CUSUMQ), lack of structural failure in the model.

Suggested Citation

  • Safdari Mehdi, 2011. "The Relationship betweenFinancial Repression and Financial Depth (Case study of Iran)," Journal of Economics and Behavioral Studies, AMH International, vol. 3(3), pages 177-184.
    • Handle: RePEc:rnd:arjebs:v:3:y:2011:i:3:p:177-184
    DOI: 10.22610/jebs.v3i3.270
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    1. Aaron Tornell & Frank Westermann & Lorenza Martinez, 2004. "The Positive Link Between Financial Liberalization Growth and Crises," UCLA Economics Working Papers 834, UCLA Department of Economics.
    2. Montek S. Ahluwalia, 2002. "Economic Reforms in India Since 1991: Has Gradualism Worked?," Journal of Economic Perspectives, American Economic Association, vol. 16(3), pages 67-88, Summer.
    3. Pagano, Marco, 1993. "Financial markets and growth: An overview," European Economic Review, Elsevier, vol. 37(2-3), pages 613-622, April.
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