<abstract xmlns="http://www.w3.org/1999/xhtml"><p> Inflation and financial development are among the factors that influence economic growth and the interaction between them is a major issue in developing countries. The aim of this paper is to investigate the effect of inflation on financial development indicators in Iran using seasonal data over 2000-2015. To achieve the research objectives, time series data were collected from World Bank and seasonal inflation rate, with 5 financial development indicators were used to measure the research variables. Then I applied Johansen Co-integration Test and Vector Error Correction Model to estimate the proposed model. The results show that inflation has a negatively significant effect on financial depth and also positively significant effect on the ratio of total deposits in banking system to nominal GDP in Iran during the observation period. Also the existence of an equilibrium relationship between inflation and other 3 indicators of Iran`s financial development used in this study was rejected.</p></abstract>

Inflation and financial development are among the factors that influence economic growth and the interaction between them is a major issue in developing countries. The aim of this paper is to investigate the effect of inflation on financial development indicators in Iran using seasonal data over 2000-2015. To achieve the research objectives, time series data were collected from World Bank and seasonal inflation rate, with 5 financial development indicators were used to measure the research variables. Then I applied Johansen Co-integration Test and Vector Error Correction Model to estimate the proposed model. The results show that inflation has a negatively significant effect on financial depth and also positively significant effect on the ratio of total deposits in banking system to nominal GDP in Iran during the observation period. Also the existence of an equilibrium relationship between inflation and other 3 indicators of Iran`s financial development used in this study was rejected.

The Effect of Inflation on Financial Development Indicators in Iran (2000–2015)

Studies in Business and Economics

This work is licensed under the Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 License.

Inflation and financial development are among the factors that influence economic growth and the interaction between them is a major issue in developing...

The Effect of Inflation on Financial Development Indicators in Iran (2000–2015)

Published Online: Oct 21, 2017

Page range: 53 - 62

DOI: https://doi.org/10.1515/sbe-2017-0021

Keywords
Inflation, Financial Development, Iran, Johansen Co-integration Test, Vector Error Correction Model (VECM)

© 2017

This work is licensed under the Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 License.

The Effect of Inflation on Financial Development Indicators in Iran (2000–2015)

Published Online: Oct 21, 2017

Page range: 53 - 62

DOI: https://doi.org/10.1515/sbe-2017-0021

KeywordsInflation, Financial Development, Iran, Johansen Co-integration Test, Vector Error Correction Model (VECM)

© 2017

This work is licensed under the Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 License.

Keywords
Inflation, Financial Development, Iran, Johansen Co-integration Test, Vector Error Correction Model (VECM)