Journal of Legal Research

Journal of Legal Research

Joint Venture Between Banks and Financial and Credit Institutions: A Comparative Study

Document Type : Original Article

Authors
Sayyed Mohammad Ayati Najaf Abadi 1
Sayyed Ali Akbar Tabatabai 2
Alireza Salehifar 3
Majid Ghamami 4
1 Judge; PhD student in Private Law, Faculty of Law and Political Science, Kharazmi University, Tehran, Iran.
2 Lawyer; M.A. student in Financial Law, Faculty of Law and Political Science, University of Tehran, Tehran, Iran.
3 Assistant Professor, Department of Private Law, Faculty of Law and Political Science, Kharazmi University, Tehran, Iran.
4 Associate Professor, Department of Private and Islamic Law, Faculty of Law and Political Science, University of Tehran, Tehran, Iran.
10.48300/jlr.2024.449031.2602
Abstract
In recent years, banks that have remained solely as "banking entities" within the framework of their conventional functions - namely, taking deposits and granting facilities - have faced significant limitations in their commercial and economic growth. Intensified competition in conventional markets for financial products and services has prompted banks to seek to expand their scope of activities. However, due to legal and regulatory limitations, the possibility of developing their functions through methods such as mergers, acquisitions, increasing market share, or transforming into "financial supermarkets" (comprehensive financial service providers) has not been available to them. Should effective deregulation occur, banks would be able to play a more active role in the economy by entering into non-banking activities. Nevertheless, a permissible and prevalent avenue for expanding non-banking activities, which lacks legal prohibition in most legal systems and whose efficacy has also been proven, is participation in joint investment contracts (joint ventures). Banks often participate in horizontal joint investments, whereby the parties jointly provide a distinct product or service. Within the framework of a banking joint venture, two or more banks or financial institutions, sometimes alongside natural or legal persons, agree to provide the necessary capital for executing a specific activity within a defined time frame and to distribute the resulting profits proportionally. Typically, the contracts concluded between banks are of the corporate joint venture type; meaning that based on the foundational and principal contract, the parties proceed to establish one or more joint subsidiary companies with independent legal personalities. This research, employing a descriptive-analytical approach and utilizing a library-based method, examines and analyzes this subject from the perspective of Iranian law and certain foreign legal systems.
Keywords
Banking Joint Venture
Horizontal Joint Investment
Deregulation
Development of Non-Banking Activities
Banking Law
-        4xtra. “Joint Venture Agreement.” Accessed September 29, 2023. Available at: https://4xtra.com/datastore/resources/JointVenture.pdf
-        Bamford, James, Geoff Walker, Tracy Branding Pyle and David Ernst. “Filling the Investment Banking Void: Why You Need a Joint Venture Advisor for Your Next JV Deal.” JV Alchemist. Accessed October 28, 2020. Available at: https://jvalchemist.ankura.com/transactions/filling-the-Investment-banking-void-why-you-need-a-joint-venture-advisor-for-your-next-jv-deal
-        Bank Expansion Reporter. “Marine Midland Teams Up with Subaru.” Bank Expansion Reporter, 1 (1988), 15-16
-        Bankers Trust. “Joins Venture in Thriving Municipals Market.” American Bankers, (1984), 3ff
-        Bastani, Alireza. “Economic Effects and Legal Frameworks for Forming an Economic Group with Shared Interests (Joint Venture).” Economic Journal, 11, 9-10 (1390 SH), 53-78 (in Persian)
-        Calem, Paul. “Joint Ventures: Meeting the Competition in Banking.” Business Review, Federal Reserve Bank of Philadelphia, 6, 1 (1988), 15-27
-        Felgran, Steven D. “Shared ATM Networks: Market Structure and Public Policy.” New England Economic Review, 3, 1 (1984), 3-16
-        Ghamami, Majid and Shadi Kasnavi. “Bankability and Its Legal Requirements in Project-Based Financing Models.” Legal Research, 25, 98 (1401 SH), 95-118. Doi: 10.29252/jlr.2021.202682.1800 (in Persian)
-        Ghamami, Majid. “Project Finance for Build-Operate-Transfer (BOT) Projects.” Comparative Legal Studies, 1, 2 (1389 SH), 101-122. Doi: 10.22059/jcl.2010.80797 (in Persian)
-        Hakimian, Mohammad Ali. “A Study on the Nature and Structure of Joint Ventures under U.S. and International Law.” Hozeh va Danesh Journal, 11, 44 (1384 SH), 31-60 (in Persian)
-        Harrigan, Kathryn Rudie. “Joint Ventures and Competitive Strategy.” Strategic Management Journal, 9, 2 (1988), 141-158. https://www.jstor.org/stable/2486029
-        Hatami, Ali and Esmaeil Hakimian. Foreign Investment Law in Light of Law and Investment Contracts. Tehran: Tisa, 1393 SH (in Persian)
-        Khazaei, Hossein and Rasoul Badri Ahari. “An Overview of the Legal Concept of J.V. under U.S. and International Law.” International Law Journal, 10, 13 (1369 SH), 51-124. Doi: 10.22066/cilamag.1990.18342 (in Persian)
-        Khazaei, Hossein. International Commercial Law: Commercial Partnerships, Vol. 6. Tehran: Javdaneh (Jangal), 1392 SH (in Persian)
-        Law Insider. “Joint Venture Bank Account.” Accessed September 29, 2023. Available at: https://www.lawinsider.com/clause/joint-Venture-bank-account
-        Loeys, Jan. “Low-Grade Bonds: A Growing Source of Corporate Funding.” Business Review, 6 (1986), 3-12. Available at: www.philadelphiafed.org/-/media/frbp/assets/economy/articles/business-review/1986/brnd86jl.pdf
-        Marshall Hargrave. “Joint Venture (JV): What Is It and Why Do Companies Form One?” Investopedia. Accessed September 29, 2023. Available at: https://www.investopedia.com/terms/j/jointventure.asp
-        Mester, Loretta J. “Efficient Production of Financial Services: Scale and Scope Economies.” Business Review, 6 (1987), 15-25
-        PandaDoc. “Joint Venture Agreement Template.” Accessed March 23, 2023. Available at: https://www.pandadoc.com/joint-Venture-agreement-template
-        Rahmani, Tahmineh. User Guide for Drafting Corporate Joint Venture Agreements. Tehran: Javdaneh (Jangal) Publishing, 1391 SH (in Persian)
-        Rahmani, Tahmineh. User Guide for Drafting Non-Corporate Joint Venture Agreements. Tehran: Javdaneh (Jangal) Publishing, 1391 SH (in Persian)
-        Sayer, Stephen and Michael Lower. Negotiating International Joint Venture Agreements. London: Sweet & Maxwell, 2004
-        Scherer, F. M. Industrial Market Structure and Economic Performance. Boston: Houghton Mifflin Company, 1980
-        Sweet, William J. & John D. Hawke. “Joint Ventures Provide Vehicle for Nonbanking Activities.” Issues in Bank Regulation, 4, 1 (1984), 12-17
-        The Rough Notes Company. “Home - The Rough Notes Company Inc.” Accessed January 9, 2022. Available at: https://roughnotes.com
-        Timsina, Sujata. “Capital Structure Management of Joint Venture Banks of Nepal.” Journal of Business and Social Sciences Research, 1, 1 (2018), 58-79. https://doi.org/10.3126/jbssr.v1i1.20949
-        Uchman, Tomasz and Ronald Radzai. “Bank Joint Ventures.” Soviet and Eastern European Foreign Trade, 27, 2 (1991), 63-67. https://www.jstor.org/stable/27749251
-        Wells Fargo Bank, N.A., Wells Fargo Ventures LLC, Dominion Homes, Inc., and Dominion Homes Financial Services Ltd. Letter of Intent for Proposed Joint Venture. Exhibit 99.3. SEC EDGAR. February 28, 2006. Available at: https://www.sec.gov/Archives/edgar/data/917857/000119312506040323/dex993.htm
-        Wex Definitions Team. “Joint venture.” Cornell Law School. Accessed April 6, 2021. Available at: https://www.law.cornell.edu/wex/joint_venture
Journal of Legal Research
Volume 24, Issue 63
Autumn 2025
Pages 459-490