Structural and functional differences between state-owned and private banks in Iran

Amin Jaffari

Allameh Tabataba’i University

Zahra Sohrabi Abad

Pasargad Insurance Company

Zahra Ghazinezhad

Daroupakhsh Distribution Company

Abstract

Banks, as financial institutions, play the role of financial intermediaries: savings, investments, production, employment and growth in the national economy are affected by operations of banks. State-owned and private banks have a relatively similar role and function and the rules and regulations governing them are not very different, because the non-usury banking act was adopted at a time when there was no private bank in the banking system of the country and all acts and regulations governing banking operations were approved by the government’s banking vision. At the moment, banks are moving within the same
legal atmosphere. Hence, the question is whether private banks are taking the path that the government banking system has taken. Despite the similarities, these banks are sometimes subject to different rules and regulations in terms of how to establish, operate and dissolve. This structural difference has led to a functional difference and has often differentiated the ways in which resources are attracted and allocated and made the private banking system somewhat offset the deficiencies of the government banking system.

Keywords:

bank dissolution, private and public banks, establishment of a bank, equipping and allocating resources, efficiency