Economic Growth of Iranian Provinces

Exit from recession and entering the path of economic growth is one of the main challenges of the Iranian economy. Considering economic literatures of the different models presented in the context of economic growth, the development of the financial sector has been one of the most important factors affecting economic growth. Financial development in Iran is basically "bank-oriented". Therefore, efficient banking and a disciplinary monetary policy by the Central Bank can be effective on the Provincial economic growth in Iran and vice versa inadequate and unhealthy performance can also create severe economic crises in the society. So in this research, we have tried to estimate and interpret the effect of banking efficiency as well as monetary disciplinary (in fact lack of disciplinary) on economic growth of Iran during the period from 2006 to 2014 (the most recent and available data) on Economic Growth of Iranian Provinces using a model of endogenous growth, particularly analyzing financial ratios. The results using fixed effects method show that Banking efficiency, Monetary indiscipline, asset quality of banks, literacy rate, Gini coefficient and Misery index have a negative and significant effects, while the labor productivity and capital inventory indices have a positive and significant effect on economic growth in Iran.