Financial Complexity: Evidence from Iran

Articles in Press

Document Type : Research Paper

Authors

Department of Economics, Yazd University, Yazd, Iran

10.22059/ier.2024.372759.1007940

Abstract

In recent years, the advancement of technology has increased the complexity in all aspects of human life. The complexity in the economy and its sub-sectors, including the financial sector, has also increased. This all has caused challenges for different economies, including Iran. In this study, financial complexity in Iran's economy has been investigated during 2005-2021. For this purpose, adjacency matrix for financial sector in Iran is calculated using World Bank data to depict the intertwining and complexity of the country's financial system. Results in the financial graph of Iran's economy show that the capital market in Iran's economy has less effect than the money and insurance market, while among the financial institutions, banks and other depository institutions play a key role in the country's financial system. Also, the government and state-owned banks, using funds received from banking sector, play a significant role in Iran's financial system. Using McCabe's method, the complexity number for the financial graph of Iran was calculated to be 79, which indicates a very high level of complexity and also high systemic risk in the financial system of Iran.

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Main Subjects

Iranian Economic Review

Articles in Press, Accepted Manuscript
Available Online from 19 May 2024

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