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The royal Bank of Kermanshah, established in 1902 A.D and managed by Louis Robin, was one of the branches of such banks. The main function of such bank was granting of loans and transferring the funds. The ordinary people could use such services by valid guarantee and bail on house. This essay tries to analyze the function and the economic and social effects of royal bank in Kermanshah province based on documents and library references with the descriptive – analytical approach. The outcome of this study reveals that such bank had negative long term consequences despite of its positive effects on economic expansion in Kermanshah. The merchants faced the bankruptcy and the loss of their capitals due to their inability for paying the debts of loans. Consequently, the bank developed its indirect influence in this strategic province by the confiscation of Merchant's lands. Furthermore, the bank caused social irreparable damages by supporting its Iranian employees and their inappropriate actions. This issue not only concluded that Iranian people to take foreign nationality in order to take advantages of foreign countries' support but also led to the cultural identity crisis because of the presence of England and foreign commodities.