An integrative approach to finance in developing countries: case of Iran (Ph.D. Dissertation)

This study utilizes financial development theories to analyze the banking and informal credit markets in Iran. With regards to financial liberalization policies, this thesis argues through historical examples that informal credit markets are able to operate due to cost advantages in dealing with certain groups, negative interest rates do not necessarily lead to low investment and savings levels, and that financial repression does not necessarily slow growth. The operational costs of bazaar credit market activities are examined to determine the efficiency of this system, and the links between the bazaar and the formal sector are investigated. Financial liberalization would not be beneficial to individuals that do not have access to the formal financial sector.