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Modeling Monetary Control in an Interest- Free Economy إدارة النقود في اقتصاد خال من الفائدة

Author

Listed:
  • ALI F. DARRAT

    (The Premier Bank Endowed, Professor of Finance, and Professor of Economics, Louisiana Tech University U.S.A.)

  • ABDEL-HAMEED M. BASHIR

    (Assistant Professor of Finance, Grambling State University, U.S.A.)

Abstract

The paper discusses the role of monetary policy in an interest-free economy by developing a general equilibrium model. The Central Bank can manipulate three basic instruments for monetary control: the reserve ratio, the profit sharing ratio and the equity holding of banks. Thus it achieves its intermediate target pegging the equilibrium rates of return in the economy. Real money demand can be stimulated by raising the reserve ratio for banks. For contraction of money demand the profit sharing ratio can be raised, even though indirectly. The model does not however integrate uncertainty into the analysis or elaborate on inflation and its effects on the real sector. يناقش البحث دور السياسة النقدية في اقتصاد خال من الفائدة عن طريق تطوير نموذج توازني عام. إن الأدوات التي في مقدور البنك المركزي التحكم من خلالها في عرض النقود في الاقتصاد تتركز في: نسبة الاحتياطي، نسب تقاسم الربح بين الشركاء ونسبة الملكية ضمن خصوم البنك، بهذا يستطيع البنك المركزي أن يتحكم ضمن نطاق معين في معدلات الفائدة التوازنية في الاقتصاد. كذلك يستطيع البنك المركزي أن يحفز الطلب الحقيقي على النقود من خلال زيادة نسبة الاحتياطي المطلوبة من البنوك. أما في حالة الرغبة في تخفيض الطلب على النقود فإن نسبة تقاسم الربح بين الشركاء يمكن زيادتها حتى ولو كان ذلك بطريقة غير مباشرة. إن النموذج المقترح لا يقوم بإدراج حالة عدم التأكد في التحليل أو مناقشة تأثير التضخم على القطاع الحقيقي في الاقتصاد بشكل مفصل.

Suggested Citation

  • Ali F. Darrat & Abdel-Hameed M. Bashir, 2000. "Modeling Monetary Control in an Interest- Free Economy إدارة النقود في اقتصاد خال من الفائدة," Journal of King Abdulaziz University: Islamic Economics, King Abdulaziz University, Islamic Economics Institute., vol. 12(1), pages 3-19, January.
    • Handle: RePEc:abd:kauiea:v:12:y:2000:i:1:no:1:p:3-19
    DOI: 10.4197/islec.12-1.1
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    References listed on IDEAS

    as
    1. Zubair Hasan, 1985. "Determination of Profit and Loss Sharing Ratios in Interest-free Business Finance العوامل المحدِّدة لنسب المشاركة في الربح والخسارة," Journal of Research in Islamic Economics, King Abdulaziz University, Islamic Economics Institute., vol. 3(1), pages 13-29, January.
    2. Hasan, Zubair, 1985. "Determination of Profit and Loss Sharing Ratios in Interest-Free Business Finance," MPRA Paper 3013, University Library of Munich, Germany.
    3. Fischer, Stanley, 1979. "Capital Accumulation on the Transition Path in a Monetary Optimizing Model," Econometrica, Econometric Society, vol. 47(6), pages 1433-1439, November.
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