Mahshid Shahchera - Iran’s Central Bank, Tehran
Azam Ahmadian - Iran’s Central Bank, Tehran

This paper has investigated a possible relationship between credit market structure and bank development in Iran and selected developing countries, using a panel regression analysis. Accordingly, the bank development index is proxied by the allocated credits to private sector, while a dummy variable has been defined as a proxy for credit market. To estimate the regressions, we have used data of 44 developing countries over the period 2000-2008. The results confirm that, depending on the regulation system, the coefficient value of the credit market has been different in the countries under consideration. The results show that the effect of credit market on bank development has been more pronounced in China , Ecuador , Iceland, Iran and Malaysia than that of other countries, which implies the more efficient regulation system in developing countries the more development in their banking system. Thus, the bigger effect of the credit markets on bank development can be obtained by the further reforms in these markets. JEL Classification: C23, G10, G18

Bank Development, Credit Market, Regulation System, Developing Countries, Panel