The Role of Financial Development on Investment in Agricultural Sector of Iran

Development of the financial sector of the country plays a key role in achieving the goal of rapid and continuous economic growth. The country with developed financial system can experience higher growth rates and faster economic growth. The main aim of this study is to examine the role of financial development and investment in the agricultural sector of Iran using a system of simultaneous equations (3SLS). The results suggest a positive effect of financial development on investment, saving, credit and production in the agricultural sector. So it can be said the financial markets are considered as a channel that can to conduct household savings into investment activity in agriculture sector. Therefore, it is suggested that the policy of adjustment and development financial sector should be considered as priority targets. It causes the share of investment in the agricultural sector is increased.

JEL Classification: G14, E22

Keywords:
Financial Development, Investment in the Iran Agricultural Sector, Simultaneous Equations System