The present study examines the effect of monetary system development on economic growth and inflation, considering the performance of private banks in Iran. This study was conducted with a mixed approach and sequential explanatory strategy. In the quantitative phase, the autocorrelation regression method with distributional lags was used, and in the qualitative phase, meta-synthesis of studies was used. The sample size in the quantitative phase was equal to the annual time series data of the inflation rate variables, the economic growth rate, and the main indicator of monetary development (liquidity to GDP ratio) in the period from 1380 to 1401. Also, the sample studied in the qualitative phase was equal to 130 documents, articles, and reports. The findings of the present study indicate that the relationship between monetary development and inflation rate in Iran, unlike in West Asian countries, was positive, and in other words, the results of the present study indicate a violation of Schumpeter's theory (1912) or at least the conditions of the aforementioned theory were not met in Iran. In addition, the main reasons for the adverse effects of monetary expansion on inflation and economic growth include excessive money creation, weakness in implementing the bank privatization policy, increasing non-performing loans of banks, and their destructive competition. Therefore, the monetary expansion policy with the establishment of commercial banks has many weaknesses and has been practically unsuccessful in controlling inflation and economic prosperity, and has even led to increased inflation and reduced economic growth.