Investigating the Effect of Shadow Banking System on Liquidity in Iran

According to financial and monetary theories, the main role of banks in the economy is to create liquidity through cash deposits and provide them in the form of loans. The main purpose of this study is to investigate the effect of shadow banking system on the volume of liquidity in Iran. For this purpose, Iranian quarterly data during the years 1397-1388 have been analyzed using structural vector autoregression and ordinary least squares. The results of  the SVAR model in the form of shadow banking shock and analysis of variance show that the shadow banking system affects the liquidity of the country in the period under review, so that the effect of shadow banking shock on supply Money and quasi-money reached their highest levels in the second year, about 29.70 and 28.40 percent, respectively, and then began to decline. Also, the results of the ordinary least squares method show that there is a positive relationship between shadow banking and money supply and quasi-money and the correlation coefficient of shadow banking with money supply and quasi-money is 0.502677 and 1.043699, respectively. Therefore, the activities of the shadow banking system increase the volume of liquidity by promoting the volume of money and quasi-money, which are the components of the volume of liquidity.