Monetary stability and interest-free banking: the case of Iran

Yousefi, Mahmood; Abizadeh, Sohrab; McCormick, Ken

doi:10.1080/000368497326525

Cited by 18 publications

(13 citation statements)

References 12 publications

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“…Conversely, Bjorvatn (1998), Kuran (1995Kuran ( , 2004 as well as Yusof and Wilson (2005) have highlighted the fact that the Islamic finance principles have handicapped the development of the economic activity. Other economists such as Darrat (1988), Yousefi et al (1997), Furqani and Mulyany (2009), Ammar et al (2013) have reached the result that the impact of the Islamic finance on the economic activity has turned out to be ambiguous and that there are no proofs of the superiority of the interest-free financial system over the interest-based one.…”

Section: Introductionmentioning

confidence: 99%

Does Islamic bank financing contribute to economic growth? The Malaysian case

Hachicha

Amar

2015

International Journal of Islamic and Middle Eastern Finance and Management

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Purpose – The purpose of this paper is to investigate empirically the impact of the Islamic Bank Financing on Malaysia’s economic growth over the period 2000Q1-2011Q4. Design/methodology/approach – A neoclassical production function augmented by some indicators of Islamic bank finance has been the theoretical framework for this paper’s empirical investigation. The unit root tests show that all the variables are integrated of order 1. The test of Johansen and Juselius (1990) has shown the existence of a single cointegrating relationship between the gross domestic product (GDP), the investment, the labor force and the indicator of Islamic bank finance. Hence, an error correction model has been constructed to estimate the economic growth elasticity with respect to the different Islamic bank finance indicators. Findings – The estimated elasticities show that, in the long run, the GDP in Malaysia is not sensitive to the Islamic financing. The estimation of an error correction model shows that the elasticity of the Malaysian output with respect to the different Islamic financing indicators in the short run turn around 0.35. Thus, the effect of the different Islamic finance indicators on the economic growth in the long run is less important than their effect in the short run. This economic result can be explained by the structure of the Islamic bank financing that marginalizes the profit-and-loss sharing (PLS)-based instruments. This turns out to be consistent with the economic reality in Malaysia, as the Islamic banks engage much more in non-participatory activities whose impact is, generally, of short term. Social implications – To improve the efficiency of the Malaysian Islamic banks as financial inter-mediaries that facilitate the capital accumulation and the economic growth, the paper suggests to strengthen the weight of the PLS-based instruments in the loan portfolios of the Malaysian Islamic banks. This may reduce inequalities and improve economic opportunities for people who have a high potential to contribute to the capital accumulation and the creation of the value-added. Originality/value – The contribution of this paper is two-fold. On the one hand, it provides a further contribution to the rare empirical literature relative to the impact of the Islamic finance on growth by determining the elasticity of economic growth with respect to Islamic bank financing in Malaysia. On the other hand, and to the best of the authors’ knowledge, this paper remains the first to correctly resort to the error correction model in determining this elasticity.

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Section: Introductionmentioning

confidence: 99%

Does Islamic bank financing contribute to economic growth? The Malaysian case

Hachicha

Amar

2015

International Journal of Islamic and Middle Eastern Finance and Management

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“…The Islamic financial system, and experimental studies to date have been conducted to examine the efficiency and superiority and stability in Islamic banks as compared to conventional banks to achieve some milestones cash the ultimate goal that focuses towards the sustainability of real economic growth, reducing inflation and reducing unemployment. (Dara, 1988) found that the banking system, without the benefits of a more superior to the goal of cash found in the interim (Yousefi et al, 1997), and (Joseph and Wilson, 2005) there is no evidence superiority and stability of the system of interest free banking system compared to the Bank interest menu. Integrated depth and according to (Abdoulie 1991, the Cave, Ahmad and actually Hammoud, 1998, my friend, in 2002, Iqbal 1997) and to maximize profitability is not the only concern of the institutes of the Islamic banking and principles based on Islamic banks in the moral and ethical values.…”

Section: Literature Reviewmentioning

confidence: 99%

Does Islamic Banking System Contributes to Economic Development

Ahmad¹,

Shafique²,

Ahmad³

2015

AJBMR

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The purpose of this paper is to give the true meaning of development from an Islamic perspective. This paper examines the dynamic interactions between Islamic banking and economic growth in Pakistan, to see if the financial system affects and growth, transformation and growth of the financial system. Usually, in most Muslim countries, and in some non-Muslim countries, Islamic banking and works as a part of the banking system and the Islamic Republic of Pakistan is one of them. The aim of this paper was to consider the opinions of the interviewees regarding the role of Islamic banking in Pakistan in economic development. Six interviewees were asked about the types of effects of Islamic banking on economic development in the Pakistan. They were asked about 8 different types of effects. Most respondents believe that Islamic banking in Pakistan had positive impact on economic development. Some scholars around the world consider the use of Islamic banking more convenient for economic development. This result also indicates that improving the infrastructure of Islamic finance in Pakistan could benefit economic development. Islamic banks can play an important role in Pakistan today.

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“…Although Islamic banks have been developed quite recently, there have been a number of theoretical and empirical studies that investigate the implications of these banks, especially comparing with the conventional interest-based banks in terms of its performance (see Khan [1985], Hassoune [2002], Darrat [2002], Youse… et al [1997], Yusof and Wilson [2005], Darrat [2002], and Isa and Kaleem [2006]). There are a few empirical studies that explore the relation between the Islamic banking system and growth.…”

Section: Literature Reviewmentioning

confidence: 99%

“…SeeKhan [1985],Darrat [2002],Youse… et al [1997],Hassoune [2002],Yusof and Wilson [2005],Isa and Kaleem [2006],Furqani and Mulyany [2009],Abduh and Chowdhury [2012], andGoaied and Sassi [2012].…”

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confidence: 99%

Implications of Alternative Banking Systems

Kumru

Sarntisart

2012

SSRN Journal

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A signi…cant number of individuals are unwilling to deposit their savings into the banking sector since it does not operate according to their religious beliefs. In this paper we provide a model that aims to answer the following questions: First, under what conditions an alternative banking system would arise? Second, what are the growth, and welfare implications of these banking systems? Our model shows that an alternative banking system would arise if individuals have religious concerns. Moreover, we show that in an economy populated with a certain number of religiously concerned individuals, the existence of an alternative baking system can generate relatively higher growth and improve welfare.

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Monetary stability and interest-free banking: the case of Iran

Cited by 18 publications

References 12 publications

Does Islamic bank financing contribute to economic growth? The Malaysian case

Does Islamic bank financing contribute to economic growth? The Malaysian case

Does Islamic Banking System Contributes to Economic Development

Implications of Alternative Banking Systems

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