Performance of Monetary Policy Under the Interest Free Banking Law in Iran, (1972-2010)

Akbar Komijani ()
Additional contact information
Akbar Komijani : Faculty of Economics, University of Tehran

Journal of Money and Economy, 2011, vol. 6, issue 1, 29-74

Abstract: The conventional wisdom in economic theory prescribes that the major role of the Central Bank is to design and conduct active monetary policy aiming at curbing inflation and achieving the price stability. After half a century of endeavors in attaining this target, Central Bank of the Islamic Republic of Iran has gone through tumultuous periods gaining mixed results in its efforts. The assessment of the performance of the Central Bank of the Islamic Republic of Iran (CBI) is also important from another aspect which is the experience of Central Bank in implementation of Shariah-based Islamic banking in Iran. The Usury (interest) Free Banking Law of Iran was legislated a few years after the Islamic Revolution of 1979 and opened a new horizon in the banking practices in Iran. Since the main purpose of this study is to evaluate and compare the performance of the central Bank of Iran primarily on inflation rate under the two specific Money and Banking Laws, therefore, we will not deal explicitly with the theoretical aspects of the issue. In another word, we assume that the monetary authority has attempted to conduct the monetary policy on the basis of theoretical foundations to achieve low and stable inflation rate. We conclude that in the review period (1972-2010), except for the 3rd Plan period (1379-1383 (2000-2005)), Central Bank of the Islamic Republic of Iran has not had an acceptable progress in attaining the aims of monetary policy. Also, in this study we will analyze challenges ahead of efficient implementation of monetary policy in Iran.

Keywords: MBLI-72; UFBL-83; Monetary Policy Trends. Macroeconomic Conditions; Independency of CBI; Expansionary Fiscal Policy; Challenges of Banking System (search for similar items in EconPapers)
JEL-codes: E5 E50 E51 E52 E58 (search for similar items in EconPapers)
Date: 2011
References: View complete reference list from CitEc
Citations:

Downloads: (external link)
http://jme.mbri.ac.ir/article-1-63-en.pdf (application/pdf)
http://jme.mbri.ac.ir/article-1-63-en.html (text/html)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:mbr:jmonec:v:6:y:2011:i:1:p:29-74

Access Statistics for this article

More articles in Journal of Money and Economy from Monetary and Banking Research Institute, Central Bank of the Islamic Republic of Iran Contact information at EDIRC.
Bibliographic data for series maintained by M. E. ().