A developed financial system, which ensures the provision, allocation, and direction of resources toward productive economic sectors, is one of the key drivers of economic growth and development. On the other hand, given the low efficiency of various economic, productive, and social sectors, attention to total factor productivity (TFP) is fundamental for global competitiveness. Given resource constraints in the economy, improving this factor can enhance investment, optimize resource allocation, prioritize productive sectors, reduce costs, improve product quality, and increase value added in economic sectors. Accordingly, the present study aims to investigate the impact of credit on total factor productivity and the growth of value added in Iran’s economic sectors using the Panel ARDL approach and quarterly time series data from 2012Q1 to 2024Q4 (Persian calendar). The results indicate that real credit, real exchange rates, and real capital formation in machinery have a positive and direct impact on the growth of value added and total factor productivity in economic sectors. Specifically, credit in the industrial sector and exchange rates in the service sector exert the greatest influence on TFP and the growth of value added. Additionally, capital formation in machinery in the agricultural sector has the most significant impact on total factor productivity.
