Ineffective cycle of financing and damage to banks and production

“Financing in the Iranian economy is traditionally and structurally bank -oriented, and most of the investments, especially in manufacturing, industrial and even infrastructure, are pursued through banking facilities,” Mehr News Agency reported.

Banks can play an effective role in working capital or short -term projects, but the structure of the banking system does not coincide with the features of large and long -term investments.

Banks mainly use short -term deposits because of the nature of their resources.

Banks are required to maintain Criticism They are in the short term and cannot allocate their resources for projects with a long return period.

When such projects are financed through banking facilities, they usually face difficulties in repayment of installments and increased banks.

As a result, neither the project will achieve the desired result, nor the bank will achieve its resources nor the investor can develop its activity.

On the other hand, a significant portion of banking facilities is allocated to different sectors in the form of task facilities.

That is to say, banks are forced to give specific sectors to specific sectors, on the basis of government guidelines or upstream directives.

This process has diverted the optimal allocation of resources and the weakening of the bank's main function as a financial intermediary.

In such circumstances, limited banking resources are distributed neither on the basis of economic priorities nor on the basis of productivity, but on the pressure and interventions of the market.

Although bank interest rates are lower than real inflation rates and the real interest rate has been negative for many years, this has not only led to financing but also the formation of allocation. Unhappy Resources and Increased Activity Ingredients Has fueled in the economy.

On the other hand, in large and long -term projects that require sustainable and predictable repayment, severe economic fluctuations, lack of stability in policymaking and large uncertainty have practically eliminated the space needed to use these seemingly cheap facilities.

In such circumstances, many firms fail to enter the project's executive phase due to unpredictability and lack of guarantees for continued financial support, or in the middle of the route due to external pressures and inefficiency of the financial system, and become large bank debtors.

The gradual withdrawal of absolute bank -based banks and the development of capital markets, new financial instruments, investment funds, long -term debt securities and real private sector participation in financing are an inevitable need to move towards sustainable growth and long -term investment.

Without this transformation, financing in Iran will continue to be ineffective in which banks are damaged, both producers, and ultimately the entire economy of the country. “