Concentration Index of Credits in Islamic Contracts and Evaluation of their Impact on Economic Growth in Iran

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Interest Free banking law at 1363 was implemented in the banking system in Iran. One of the main goals of this law was eliminating usury from monetary system, and utilization from non-usury credit impact on economic growth through preferring money contribution in the capital. This paper uses data from years 1363 to 1386 and implementing Herfindahl-Hirschman index, evaluated and ranked concentration credits in the banking contracts. Also the causality relationship between economic growth and exchange contracts is reviewed. The results show that the concentration of credits in exchange agreements with fixed-rate is higher than participatory contracts.
The Granger causality test between the credit swap contracts with economic growth does not endorse, considering that one of the goals of elimination of usury (interest) in Islamic economics is affecting economic growth. Hence for higher economic growth in Islamic banking, credits concentration should lead to on partnership contracts.
JEL Classifications: O42-E52

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