The Report on "Non-Interest Income in the Iranian Banking System" was published by the Economic Research Department of the Middle East Bank. This report covers topics such as the general concepts of non-interest income in the banking system, their advantages and disadvantages, and an examination of non-interest income both globally and in Iran.
The Central Bank of Iran (CBI) has exercised a macroprudential policy since the year 1400 (based on Persian Calendar) through controlling the Liquidity (M2) growth rate, aimed to rein in the CPI inflation rate. As policy requires the banks to put a cap on monthly growth rate of their assets1 , the profitability of the banks from interest-income would be challenged since their money creation which translates to loan making is limited. Precisely speaking, the more banks depend on interest income, the more vulnerable their profitability is to the CBI policy. This Report opens with definition of the non-interest income in the world banking system and compares that type of income in the Iranian banking system and the rest of the world based on the most recent financial statements of some selected banks. The Report concludes with the strengths and weaknesses of the Iranian banking system regarding non-interest income and provides policy proposals.
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