Determining the Optimal Period of Islamic Banking Contract-Based Facilities Impact on Agricultural Value Added in Iran in the Framework of BVAR Model and SSVS-Wishart Prior

Subject Areas : Agricultural Economics Research

Mahdi Ghaemi asl ¹

1 - Assistant Professor, Faculty of Economics, Kharazmi University, Tehran, Iran

Received: 2019-08-13 Accepted : 2022-12-28 Published : 2022-10-23

Keywords: Agriculture, Banking Facilities, Value Added, Bayesian Analysis, SSVS-Wishart,

Abstract :

In this study, a Bayesian Vector Auto Regression (BVAR) model with SSVS-Wishart prior in the period 1971:1-2017:4 was used to determine the optimal period of credit impact of banking system on agricultural sector in Iran. The results show that the optimal period of positive impact of banking system facilities is between 3 to 5 seasonal periods. Therefore, the impact of banking facilities on the agricultural sector is not sustainable, but due to the short grace period, necessity of repay the principal and interest of the facility and probable default and late payment fees, these facilities can also modify agricultural production and value added in the long run (after six seasonal periods). Therefore, given the centrality of banking facilities in financial markets in Iran, it is suggested that the structure of bank facilities (including facility rate, repayment period, grace period, interest rate and type of collateral and guarantees) should be specified in a way that increase the period of positive impact of banking facilities on agricultural value added

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