The Role of Islamic Contracts Credits in Private Investment in Iran: An Application of Threshold Regression Approach
Keywords:
Credits, Iran's Economy, Islamic Banking, Islamic Contracts, Private Sector Investment, Threshold Regression ModelAbstract
Objectives: "The present research aims to investigate the effects of partnership and exchange contracts on private sector investment from Q1 2001 to Q4 2017.
Methods: The study employed the Threshold Regression (TR) approach to analyze the impact of Islamic contracts, separated into exchange and partnership contracts, on private sector investment in Iran.
Results: The results show that the impact of partnership and exchange contracts on private sector investment is not constant and varies depending on the investment regime. Specifically: When investment is less than $313,633 (first regime), partnership contracts do not have a significant effect, while exchange contracts negatively affect investment. In the range of $313,633 to $347,953 (second regime), none of the variables have a significant effect. When investment ranges between $347,953 and $430,885 (third regime), only partnership contracts have a significant effect, positively impacting private sector investment. Between $430,885 and $475,389, none of the contracts have a significant effect. For investments exceeding $475,389, partnership contracts have a significant negative effect.
Conclusions: The study concludes that it is necessary to localize Islamic financial products for exporters and investors in a way that maintains the competitiveness, attractiveness, and innovation of the Islamic banking industry.
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