Analyzing the Effect of Change in Banks’ Interest Rates on Investment in Industry and Mine Sector

Abstract

In this paper, first, financial markets have been analyzed and then financial institutions in economy, in addition to industrial and mineral investments in developed and developing countries, specially Iran, have been compared. Using estimation method 3SLS, the selected model has been estimated. The model consists of a trilogy, the variable functions of which are private investment in the industry and mine sector, public investment in industry and mine sector and the amount of liquidity. Balance of bank credits to the none governmental sector, risk index, bank's credit rates, real exchange rate, inflation rate, domestic national product and governments indebtedness to commercial and specialized banks being the independent variables. According to the results of the research, the bank's interest rate creates no sensitivity in the investment of the private sector in industry and mine in Iran; but the balance of the banking credit to the none governmental sector in industry and mining sector has had a positive effect on the private investment in industry and mine.