Determined by many factors such as existing cultural conditions, education, and aesthetics innovation capacity is one of the critical dimensions for economic development. Therefore, by analyzing the factors that promote or constrain the innovation capacity of a society could benefit the economic and social welfare. For the very reason, in this paper, we tried to assess the role of culture in determining innovation capacity of a society, since it is believed that the culture is matter in terms of improving the innovation capacity of a society. For this purpose, we employed Hofstede Index, which is used to measure cultural differences across countries to explore the relationships between culture and innovation. Moreover, inasmuch as innovation capacity is crucial for economic development, we need to consider these questions: could we improve the innovational capacity of a society?If yes, what are the strategies or methods to do it? Although formation of a culture supporting creativity or learning to be creative is tough issue, many scholars claim that it could be learned by following some strategies. Therefore, one may conclude that creativity is a skill that can be developed and a process that can be managed.

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Islamic banking has come to the forefront as being one of the fastest growing branch of the global financial industry in recent years. In this study we evaluate whether coexistence of Islamic and conventional banks promote financial stability. In this respect, we evaluate two types of financial systems: (1) A system solely comprised of conventional banks, (2) a dual system in which conventional and Islamic banks coexist and interact with each other. Accordingly, we design two agent-based models representing aforementioned systems and examine possible contagious effects and causes of bank failures by employing the volatility spillover methodology. We find that Islamic banks greatly promote stability by providing liquidity during financial shocks and create more liquidity per asset compared to conventional banks. We also find that they tend to hold more cash than conventional banks, which cushion the effects of a possible liquidity squeeze. Conventional banks, on the other hand, tend to have reserve deficits, which intensify during shock periods. We conclude that coexistence of both bank types creates a win-win situation and contributes to financial stability.

Fractional reserve banking is a system in which banks extend loans by creating credit/deposit money, and which can be considered the basis of modern financial architecture. Nevertheless, it has been criticised because of its inherently weak and fragile structure in terms of financial and economic stability. As a theoretical solution, full reserve banking has been supported in academic circles, with many technical variations. However, Islamic economics can help to maintain financial and economic stability with its original institution of waqf. Besides performing social functions, waqf also undertakes financial intermediary functions and preserved financial stability in the period of the Ottoman Empire. The purpose of this study is to examine the effects of fractional reserve banking on economic stability and to make a comparison with full reserve banking to observe its potential as an alternative solution. The study also examines the efficiency of the Islamic social and economic institution of waqf in maintaining economic stability in both fractional and full reserve systems. The results demonstrate that full reserve banking is a promising approach to maintaining economic stability and that waqf enhances economic stability in both banking systems.

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