An Analysis on How to Remove the Conflict of Interests between Productive and Banking Sectors According to Different Banking Models

As in many other countries, the conflict of interests between productive and banking sectors in Iran is evident. Sometimes, productive sectors mislead banks, and spend the loans received from banks on speculative activities, which lead banks to avoid offering low-interest financial services for productive sector. In this, framework, the shortage of financial resources, heavy interest rates, the long process for getting a loan, and the limited period for repayments have provoked much satisfaction among people as well as productive sectors. In this paper, having reviewed the problems with Iran's banking system as well as its possible origins, the Japanese banking model implemented from 1927 to the mid-1970s is introduced as a solution for reconciling the banking sector and other sectors. In order to resolve this conflict, Japan pursued three principles: managerial and ownership-based link between the banking and productive sectors, governmental control over the banking system, and long-term financing of industrial projects by governmental financial institutions. The Japanese banking model can be used to design a new model in which the interests of the banking sector are consistent with productive sectors in Iran.