Investigating the Impact of Different Credits of free usury (interest) banking system on Stagflation in Iran

Major equipping and allocation of credits in the Iranian economy is carried out by the banking system. Therefore, considering the role of banks in the economy, especially the financing of economic enterprises, the impact of banking facilities through various contracts on the phenomenon of stagflation is essential. The bank credit channel is one of the channels of monetary transfer in the mechanism of monetary policy transfer, and monetary policy of the central bank is implemented through a variety of contracts through a bank crediting channel. In this research, the effect of Participative contracts, exchangeable contracts, direct investment and Qarzol-Hasaneh contracts in free usury (interest) banking on Stagflation in Iran has been studied. For this purpose, by Using the seasonal data of Islamic-based facilities along with exchange rate, oil revenues and government expenditures variables during the period of 2000-2016, within the framework of the BVAR model and the Normal-Wishart prior of Sims-Zha has been evaluated. The results show that increasing the level of facilities within the framework of Participative contracts, direct investment and Qarzol-Hasaneh contracts leads to a relative and limited increase of stagflation, and in contrast to the exchangeable contracts, leads to a reduction of stagflation.