The Effects of Bank Credits on Employment of Iran's Economic Sectors

Due to the enhancement of Iran’s banking system through increasing services and credits in recent years, the performance of the banking system on net employment has been of interest to be examined. What is important is to see the efficient role of such credits in creating new job opportunities in economic sectors. Therefore, the purpose of this paper has been to investigate the effects of changes in bank credits on employment of the country’s agriculture, industry and services sectors, and to measure the trend of employment creation over the period 1983-2006. Accordingly, the indicators of both job-creation and job-destruction have been formulated to calculate the net employment in these sectors created by the bank credits during the considered period. The results obtained indicate that the allocation of bank credits has created the highest annual rate of employment, on average, in the agricultural sector, while the lowest rate has belonged to services. Basically, the results reveal the fact that the performance of the banking system has made volatile employment to these sectors, particularly to the services, so that such credits have led job-destruction in several years of the period.