Pakistan Institute of Development Economics



The Money Market In Iran

Many of the nations of Asia, now engaged in the task of industrialization and building a modern economy, have, in fact, inherited ancient and highly developed credit systems. These systems of lending and creating money need, however, to be adapted to twentieth-century requirements, financing not only the traditional land trade and inventory, but now extending also to industrial working capital and international transactions. Iran is well suited as an example of some of the factors and problems influencing this subject. The country’s short-term money market is approxi¬mately evenly divided between a powerful traditional bazaar moneylending system and a handful of commercial banks which, although often possessing externally some modern characteristics, are conditioned by a cultural environ¬ment to differ in substantial respects from banks in economically advanced states. The present essay focusses on some of the issues and techniques of these institutions, examining primarily those concerned with short-term credit rather than the three specialized lenders devoted to long-term industrial finance.

Richard E. Benedick

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