The issue of bank profits is an issue that has led economic analysts to differ, with some calling it an opportunity to pursue expansionary policies, while others see it as leading to government debt and inflation in the coming years. . In the following, we will examine this issue.
*** Rumors about the growth of interest on bank profits
The issue started from here that some banks announced the offer of 20 to 23 percent deposit interest and the people’s capital has been transferred to bank deposits after heavy losses in the stock market. After the change in the stock market situation, many investors turned to bank deposits with bank advertisements. This issue was later accompanied by illegal attractions and extra-legal profits were added to it. Some banks turned to betting conditions by advertising more than 18% interest rates.
*** Vulnerability of the capital market from the growth of bank deposit interest
Unfortunately, the capital market is in a situation where any tension in the market and even good economic news cause the stock market index to fall. In the current situation where shareholders are tired of the current situation and any flip can be cold to the outflow of capital from the market, some banks have inadvertently decided in a strange move to increase their bank profits for deposits. The important thing is that this is happening in the last months of the government, and the reasons for this must be evaluated in an expert manner.
*** Hemmati issue regarding the growth of bank profits
The Governor of the Central Bank has considered the issue under control and has announced that the Central Bank is ready to deal with the disturbances of the capital market and the financial system of the country. The position of the Governor of the Central Bank towards bank profits has not been convincing for market participants, and in this regard, there have been objections to the performance of this institution. The Governor of the Central Bank believes that the increase in bank profits has nothing to do with the stock market and had given the necessary warnings about the stock market. Some believe that interbank profits are a kind of reference for each bank in determining interest, banks move to their liquidity equilibrium if they face a liquidity deficit by borrowing or borrowing.
*** Various hypotheses about increasing bank profits interest
There are different views on changes in bank interest rates, two of which are more likely. First, the interbank interest rate is the reference interest rate in the money market and is a criterion for determining other interest rates. Second, inflation expectations in society are currently declining under several factors. This means that next year we should see a reduction in prices in society. Increasing interest rates on bank deposits will reduce the price of goods in the country. But the stock market will actually suffer from this issue.
*** Facilitate interbank cash flow
Banks in the country’s financial system have adopted an interactive system in such a way that money from banks owed to banks to move to high value-added banks in previous years. Therefore, variable interest rates in banks and the growth of bank interest margins will cause this money flow in the form of an interbank loan to balance the economic conditions of the country’s banking system. This may be an opportunity for the banking system, but the microeconomic system and household economic decisions to invest will be different.
*** Banks need to reserve interbank settlement
But the question must be answered as to why banks have welcomed this growth in deposit interest rates. In this situation, the banks’ liabilities increase and it is practically considered as a risk for the banking system. If we look at the volume of bank transactions, we see that it has decreased compared to previous months. Therefore, the need for banks to reserve interbank settlements is reduced and interbank interest rates are reduced. The Governor of the Central Bank also spoke about this. The general public thinks that interest rates on deposits have the same meaning as interbank interest rates, but this is not the case. Deposit rates are essentially the interest that accrues on deposits.
*** Take a look at the legal interest rates on bank profits
It should be noted that the legal interest rate on bank deposits is 15%. Some banks have declared their profits above these figures. This is completely against the law. We should not steer the monetary, financial and commodity markets in a certain direction. Raising bank profits may save a number of banks that are on the verge of bankruptcy, but this will cause irreparable damage to the capital market. It is impossible to differentiate between the banking system and the stock market and sacrifice one over the other.
*** Extreme views on lower interest rates on bank profits
We are in a situation where some people believe that bank interest should be around 5%. This approach is an extreme debate in banking policy, but it is equally wrong to raise interest rates in some banks in a tasteful manner. Therefore, monetary policymakers must prevent this through legal means. If this action is to happen, it is better that it be step-by-step and based on a series of policies.
*** Modification of non-bank corridors under the shadow of law enforcement
Banks need to be a little more law-abiding in the current situation. They should also pay attention to other financial markets and, most importantly, pay special attention to their obligations to comply with central bank rules. Unfortunately, in other issues such as loan payment methods or marriage loans and other pricing, this lack of supply has become popular in banks. If the banks act in accordance with the notification of the Central Bank, the non-bank corridor will not act at all
It is also possible that the exchange rate and inflation will decline in line with that, and the situation in the capital market will also improve. If the bank interest rate suddenly decreases because the people’s trust in the capital market has decreased, the amount of liquidity will go to the parallel markets, including currency, coins, gold, cars, etc., which will be followed by problems such as inflation. There is.
*** Implementation of monetary and banking policies in the form of open market
Bank deposit rates are part of the investment cost and reducing bank deposit rates increases the volume of investment. As a result of increased production, prices fall; As a result, inflation decreases. The central bank seeks to implement monetary policy through open market operations. Therefore, it conducts these transactions in the interbank market and sets a certain interest rate for them.
*** The need to compensate for the lack of liquidity of banks
When interbank interest rates rise, the cost of borrowing opportunities for banks increases. Therefore, to compensate for the lack of liquidity, they increase the interest rate on deposits and attract liquidity. When the amount of money in circulation decreases, the inflation rate also approaches the inflation rate of the central bank.
According to experts, now is not a good time to reduce interbank profits. On the other hand, some officials claim that interbank profits should be reduced as soon as possible. Rather, banks should invest their liquidity in the stock market so that the Iranian stock market returns to its peak again.
*** Lack of cooperation of capitalists with government policies
The main reason is that capitalists; Are always in the fight against the government is that programs; Behaviors and decisions of government officials; It does not provide security for the capitalist. The capitalist sees when to set up an industrial factory; He has to endure a thousand kinds of obstacles, bumps and harassment, it is natural that he becomes a fugitive, a pessimist and an anti-government. But the problem is that unfortunately the smoke of such an event is visible to the people. Unfortunately, if the government and the capitalists move in a certain order with a convergence, we will see that many monetary and financial problems of the country will be solved. But in the current situation, we are very far from this situation.
*** Public luck towards bold funds
Bold Fund is a type of mutual fund that raises money from investors who want to participate and invests the money in small and medium-sized start-ups with high growth potential. In fact, these funds are a kind of portfolio. Because startup financing is costly and individuals are not able to participate maximally, venture capitalists are usually legal entities. These legal entities include companies or funds that have raised their capital from individuals and entities in banking, insurance, pensions, and so on.
*** Advantages of the Bold Financial Funds approach
Bold funds are highly profitable because a start-up online business is growing at the beginning and it is natural that it will bring good profit to the investor as well; On the other hand, this investment can be high risk because the project may fail and the investor will lose. Thus, unlike an active stock investor who is only exposed to systematic macroeconomic risks, inflation, or market risk, a venture capitalist is exposed to a variety of systematic and non-systematic risks such as available market size risks, intense competition, Rules and regulations will be scalability, income model, withdrawal from investment, and so on. So the risk-taking feature, in addition to the many risks involved in this type of investment, is very unlikely to be due to very large start-ups.
*** Focus of the banking system on demand
In the new year, the country’s banking system, in addition to strengthening the supply side and providing direct facilities to production units, should focus on the neglected area of the “demand” side and organize this area by providing facilities to people to buy Iranian goods. کردن. Banks can enter into contracts with manufacturing firms or executive agencies, injecting resources that are reversible and less risky.
*** New trick of banks for interest on bank profits
Meanwhile, several banks used another trick to increase interest rates. The interest rates of these banks seem legal in the first place because they declare a one-year interest rate of 16% and a two-year interest rate of 18%, but further explain that after one to three months (different in different banks) the depositor is able to withdraw his deposit without In terms of failure rate take it out of the account. This is not in line with central bank regulations, and banks are violating it. Because a certain rate is set for each amount of deposit in the bank, when the name of the deposit is two years, any amount withdrawn earlier must be subject to the failure rate.
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