Credit Constraints on Economic Growth

Studies show that the real volume of bank loans in the year 1404 (2025) has decreased by about 20% compared to the year 1397 (2018). This decline has occurred while nominal loans have grown on average by 35% annually during this period, but the producer price index has increased by more than 42% in the year. As a result, the increase in the nominal amount of loans has not been able to maintain the real financing power of businesses. Simultaneously, the uneven distribution of credits has made it more difficult for small and medium-sized private enterprises to access banking resources. One of the main factors contributing to the decrease in the real power of loans is the increase in the velocity of money and the decrease in real demand following rising inflation expectations. This behavior has led to inflation rates outpacing the growth rate of liquidity. Under such conditions, an increase in nominal loans does not necessarily enhance the financing power for production, as the growth in the costs of raw materials, equipment, and other inputs will always be one step ahead of the growth in loans. In addition to the decrease in the real amount of loans, their distribution is also highly uneven. Inefficient management of some enterprises, price controls, and macroeconomic instability have reduced the productivity of many large businesses and increased their dependence on government support and cheap bank loans. On the other hand, the negative real interest rate on loans has intensified competition for access to cheap loans. In this competition, large enterprises with special relationships and access often have a better position to attract credits. Consequently, banking resources are not necessarily directed towards more productive enterprises, and small and medium-sized private companies, despite their growth and job creation potential, remain deprived of sufficient access to financial resources. The continuation of this trend limits the growth of private enterprises and job creation and prevents the exit of inefficient companies and their replacement with more productive ones.