Assessing Resilience Index of Monetary and Financial Sector of Iran’s Economy

Hesameddin Ghasemi () and Abbas Arabmazar ()
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Hesameddin Ghasemi: Ph.D. Candidate in Economics, University of Shahid beheshti
Abbas Arabmazar: Associate Professor of Economics, University of Shahid Beheshti

Quarterly Journal of Applied Theories of Economics, 2019, vol. 6, issue 3, 23-48

Abstract: Economic resilience refers to the ability to deal with various economic shocks as well as the ability to recover from crises. In this regard, the monetary and financial sectors are among the most important sectors in Iran’s economy, which are affected by shocks such as sanctions. For this reason, their resilience to crises is very important. The purpose of this paper is to define and estimate Iran's monetary and financial sectors resilience index. Therefore, according to the existing resilience literature, and using the grounded theory (GT) approach, theoretical saturation was obtained with respect to the resilience components of the monetary and financial sectors. As far as their importance is concerned, the growth rate of government oil revenues, the fluctuation of the growth rate of liquidity, risk index, the ratio of bank debt to the central bank to the monetary base and the ratio of government debt to the banking system to liquidity were identified as indicators of resilience of the monetary and financial sectors; respectively. The time series of the resilience index of monetary and financial sectors were estimated for the period from 1976 to 2016. Based on the obtained index, with exogenous shocks, the vulnerability of this sector is high. In addition, based on the results, in order to increase the resilience of this sector, it is recommended to correcting the banking system and relationship the government as an effective institution with the monetary and banking structure of Iran's economy.

Keywords: Resilience; Vulnerability; Grounded theory; Bayesian Model Averaging; Monetary and Financial Sector (search for similar items in EconPapers)
JEL-codes: C13 E42 E60 G21 (search for similar items in EconPapers)
Date: 2019
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