Abstract

In many developing economies, including Iran, household micro-capitals are diverted away from productive sectors toward unproductive markets such as gold, foreign currency, and digital assets. This phenomenon stems less from a shortage of financial resources than from the absence of trust-based institutional mechanisms to attract, channel, and reinvest these resources in productive activities. The present study aims to design and analyze an alternative institutional model for financing small and medium-sized enterprises (SMEs), drawing on the logic of rotating savings and credit associations (ROSCAs) and community participation. The research employs a theoretical-analytical approach, integrating conceptual synthesis, cross-case comparison, and structural simulation, grounded in 101 scholarly and institutional sources. The findings reveal that the Production Development Fund model, based on the triad of micro-capitals, SMEs, and a government regulatory body, can effectively address structural bottlenecks in financing. By replacing subsidy-driven policies with participatory reinvestment mechanisms, this model re-establishes the link between micro-capitals and production and offers substantial potential for development-oriented institutionalization in Iran.

Keywords: Micro-capitals, Small and Medium-Sized Enterprises (SMEs), Rotating Savings and Credit Associations (ROSCAs), Production Development Fund