Investigating the Impact of Qard al-Hasna (Interest-Free Loan) Facilities on the Misery Index in Iran: An ARDL Approach

Rising inflation coupled with unemployment rates (the misery index) can lead to many economic and social costs. on the other hand, considering the emphasis of the islamic religion on reviving the tradition of qard hasanah (benevolent loan) and the impact of these facilities on macroeconomic variables, the key goal of this paper is to investigate the impact of qard al-hasna (interest-free loan) facilities on the misery index in iran, utilizing data from 1984 to 2021. the misery index serves as a comprehensive measure of economic well-being, incorporating indicators of inflation and unemployment. employing the autoregressive distributed lag (ardl) model, the research analyzes both short-term and long-term relationships between the share of qard al-hasna facilities and the misery index. the findings reveal that a one-unit increase in the share of these facilities results in a 0.31% decrease in the misery index in the short term and a 0.52% decrease in the long term. additionally, the error correction model indicates that 60% of short-term fluctuations adjust toward long-term equilibrium. the study also highlights the negative impact of government spending on the misery index and the positive effect of the real exchange rate. based on these results, the paper recommends enhancing the monitoring of banking performance in allocating qard al-hasna facilities, directing government spending towards development projects, and managing exchange rate policies to mitigate adverse economic effects. this research underscores the significance of qard al-hasna facilities as a viable tool for alleviating poverty and improving economic conditions in iran.