Financial Repression, Economic Growth and Development

Abstract

Economic growth and development of market, stock exchange and related variables are among components which influence on business, economic activities and management of society. Financial repression is among economic variables greatly influencing on financial market specifically capital market and economic growth and development; so that, this concept caused to publish financial growth and development theory and its role on economic growth and development by Mackinnon and Shaw in the year 1970 and 1973 and on this basis financial repression is regarded as set of policies with the goal of obtaining income from financial systems and using them for creating resource at specific sectors of economy. Therefore, goal of the present article is involving government on pricing and allocating loans through repressing rate of real interest. Methodology of this research is historical method by studying scientific and theoretical basis with library studying by using data collected from Tehran stock exchange. Results of this study show that determining relationship of financial repression and economic growth and development and criterion for measuring financial repression is very important. There is no reverse significant relationship between indices of financial repression i.e. inflation and market indices i.e. industry index, financial index, total index and relationship of both variables is not equal.