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Previous research has suggested that Islamic banking systems may be more stable than Western systems. However, this contention has only been tested empirically for the case of Tunisia, a country with no significant history of Islamic banking. This paper replicates the study done on Tunisia for the case of Iran, a country with some history of Islamic banking. The results are mixed, with some evidence both for and against the hypothesis of greater stability for Islamic banking. It is suggested that a good deal more work must be done to prove claims about the relative stability of Islamic banking.

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A century ago Thorstein Veblen argued that knowledge, which is produced and possessed by the community as a whole, is the foundation on which the productivity of "capital" rests. Orthodox economists chose to ignore Veblen and instead accepted John Bates Clark's definition of capital and the marginal productivity theory that goes with it. Recently, however, mainstream economists working on the "New Growth Theory" have rejected Clark's approach and have redefined capital so as to emphasize the importance of knowledge as well as its social character. Nevertheless, they still have an important lesson to learn from Veblen about growth, namely that technological development is nothing less than a process of cultural transformation.Veblen, New Growth Theory, Technological Change, Capital,