The banking system, as the most important source of financing in developing economies, plays a vital role in supporting productive projects and economic growth. However, banks operate under a set of legal constraints and requirements that can simultaneously have both positive and negative effects on their efficiency. Given the high dependence of manufacturing firms on bank resources (with more than 70 percent of this sector's financing relying on the banking system), understanding how prudential regulations, collateral requirements, and supervisory policies affect the financing process can help improve policymaking and the efficiency of the credit market. The present study was conducted using a descriptive-analytical method and combined analysis of legal documents, banking statistics, and a survey of credit managers and manufacturing sector activists. The results show that legal restrictions and requirements, although they increase the health and stability of the banking system, in practice reduce the flexibility of banks and, by creating complexity in processes (especially in the area of ​​collateral), limit the speed and volume of production financing. In cases of excessive strictness, this leads to an increase in the cost of financing, a significant decrease in the speed of granting facilities, and a restriction on firms' access to resources. However, the conclusion of the research emphasizes the need to review some of the regulations, especially in the area of ​​collateral and prudential ratios, and to create flexible mechanisms for production projects so that the goals of financial stability and economic growth can be achieved simultaneously and in a balanced manner.