Inflation Targeting: An Analysis of the Vulnerability of the Banks Health

Monetary base growth control and lack of sufficient supervision on deposit interest rates has worsened the financial health in 1993 (Hijri-Shamsi). In this paper, we use a probability panel model and study the effect of macroeconomic variables and banks size on the possibility of the bank financial health. The results show that (due to the inefficiency of the banking system in Iranian economy and its reliance on monetary base), the one-digit inflation targeting have worsen the financial health.