Investigating the role of development banks in fixed investment formation in Iran

This paper delves into the role of development banks in shaping fixed invest-ment and the economic growth of the country, emphasizing the facilities provid-ed by these banks. To accomplish this, quarterly data from the country s devel-opment banks spanning the period 2006-2020 are utilized. Experimental tests are conducted to explore the causal relationships between variables and estimate long-run connections through the Granger causality test and the vector auto-regression method (VAR). The results highlight the positive and significant impact of development sector facilities on fixed investment formation and other payment facilities within the banking network. In the context of the connection between liquidity and the total payment facilities of the banking system with the variable of fixed investment formation, it is revealed that all payment facilities exhibit positive and significant effects, while liquidity bears insignificant effects on fixed investment formation. The outcomes of the long-run relationship anal-ysis demonstrate that development sector facilities and liquidity volume share a significant relationship with fixed investment formation in the Iranian economy over the long term. Furthermore, in terms of the short-run relationship, devel-opment sector facilities exert positive and significant influences on fixed in-vestment formation and overall investment in the economy.