Document Type : Article

Authors

• Seyed Amirhosein Seyedi ¹
• Seyed Mohammad Mahdi Ghamami ²

¹ Deputy of Banking Law think thank & PhD student in public law at Imam Sadiq University (AS), Tehran, Iran

² Associate Prof. Department of Public Law at Islamic Studies and Law Faculty at Imam Sadiq University (AS), Tehran, Iran

Abstract

Despite the institutional design of banks as vehicles for monetary operations within national and international economic frameworks, factors such as negative real interest rates have driven them toward alternative profit-generating practices. These practices, commonly termed in legal-economic contexts as "business ownership," "commercial investments," or "banking-related legal partnerships," have proliferated. While this systemic issue has become markedly prevalent in Iran, the legislature, in a delayed response, initially enacted Articles 16 and 17 of the Law on Removing Obstacles to Competitive Production. However, nearly a decade after their adoption, these provisions have not only failed to resolve the problem of banks’ commercial engagements but have also led to stricter regulatory measures under Article 8 of the Seventh Development Plan Law. This research hypothesizes that Articles 16 and 17 of the aforementioned law have inadequately regulated banks’ commercial activities due to critical legislative flaws, including deficient legislative understanding of the issue’s complexity, ineffective legal drafting (e.g., ambiguous terminology, lack of coherence, perpetually exploitable exceptions, absence of illustrative case examples), unverifiable provisions, and lax regulatory standards that conflict with legislative objectives, compounded by institutional conflicts of interest. To validate this hypothesis, the authors employ a descriptive-analytical methodology to define the scope and multidimensional nature of banks’ commercial activities and retrospectively assess the law’s impact during the post-implementation phase. The analysis reveals that Articles 16 and 17 adopt an excessively prohibitive approach toward banks’ commercial engagements, failing to establish a framework for effective regulation. This conclusively corroborates the hypothesis that structural deficiencies in legislative design and implementation have rendered these provisions ineffective.

Keywords

• Entrepreneurship
• banking
• investment
• competitive production
• surplus property

Main Subjects

• Public Law