Financial and Banking Strategic Studies

Pathology of Iran's banking system in the development of a knowledge-based economy using the three-branch approach: A case study of Bank Sepah

Document Type : Original Article

Authors

Abolfazl Bagheri 1
Marzieh Shaverdi 2
Sayyed Mohammad Amin Sayyed Mousavi 3
Seyed Mohammad Azimi 4

1 Department of Management of Technology, National Research Institute for Science Policy (NRISP), Tehran, Iran.

2 Department of Science, Technology and Innovation Financing, National Research Institute for Science Policy (NRISP), Tehran, Iran.

3 Department of Management, Science and Technology Policy, Faculty of Management and Social Sciences, Imam Hossein University, Tehran, Iran.

4 Department of Business Administration, Central Tehran Branch, Islamic Azad University, Tehran, Iran.

https://doi.org/10.22105/fbs.2026.585675.1187
Abstract
Purpose: This paper aimed to diagnose the role of Iran’s banking system focusing on Bank Sepah as a case in financing the knowledge-based economy. Although knowledge-based companies constitute more than 11% of the country’s active economic enterprises, they received only 4.8% of the banking network’s facilities in 2023, and Bank Sepah’s share (2.2%) lags well behind comparable banks, revealing a substantial financing gap. The study seeks to identify the structural, behavioral, and contextual challenges that hinder the banking system from playing an effective role in developing the knowledge-based economy and to propose corresponding policy solutions.
Methodology: The research is applied-developmental in purpose and qualitative-interpretive in method, employing a descriptive-analytical case-study strategy. Based on the principle of triangulation, data were gathered from three complementary sources documentary analysis, semi-structured interviews, and focus-group sessions and analyzed through thematic analysis within the framework of Mirzaei Ahranjani’s “Three-Branch Model” (structural, behavioral, and contextual factors). Purposive sampling was applied, and the trustworthiness of the findings was ensured through methodological triangulation, member checking, and independent coding.
Findings: The pathologies of the banking system in the knowledge-based domain are not single-cause but stem from an interconnected causal network of three sets of factors: Structural factors (post-merger strategic ambiguity, uniform credit-evaluation procedures, and limited acceptance of intellectual property as collateral); behavioral factors (institutionalized risk aversion, short-term return expectations, the tendency toward enterprise ownership, and information asymmetry); and contextual factors (a stringent legal framework, the gap between legal text and banking practice, macroeconomic instability, and international sanctions). The findings indicate that the fundamental challenge is “institutional-procedural” rather than “resource-based”.
Originality/Value: This study provides the first systematic pathology of a specific Iranian bank (Bank Sepah) in the knowledge-based field using the Three-Branch Model, shifting macro-level analysis to the micro-organizational level. By incorporating the variable of the 2019 merger of the armed forces’ banks absent from prior research it offers a coherent set of policy recommendations applied simultaneously across the structural, behavioral, and contextual layers.

Keywords

Bank Sepah
Banking System
Innovation Financing
Knowledge-Based Economy
Three-Branch Model
Subjects
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Financial and Banking Strategic Studies
Volume 4, Issue 1
Spring 2026
Pages 86-105

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