The Impact of the Enforcement of the General Policies of Principle 44 of the Constitutional Low of the Islamic Republic of Iran on Financial Development With Emphasis on Capital Markets

According to the policies of the principle 44 of the constitutional law, some goals such as promoting economic enterprises’ efficiency as well as the productivity of material, human & technological resources and changing government’s role from direct ownership and management to policy-making and directing are being taken into account by Iranian statesmen. The purpose of this research is to study the impact of the enforcement of the general policies of principle 44 of the constitutional low of the Islamic Republic of Iran on financial development with emphasis on capital markets of executing the policies of 44th article on financial development in Iranian capital market. Therefore, we have designed a quantitative index consisted of financial development sub-indices of capital market. Financial development in a comprehensive definition is defined as “factors, policies, and institutions that lead to effective financial intermediation and markets, as well as deep and broad access to capital and financial services”. Designing financial development index for Iranian capital market is performed for the first time in this research using similar researches as well as experts’ viewpoints. According to the designed index for financial development, the impact of the enforcement of principle 44 are measured for two periods: before the enforcement of these policies (years 2001 to 2005) and after the enforcement (years 2006 to 2009). The findings of this research show that the policies have had a significant positive effect on the level of financial development in Iranian capital market.