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Developing economy banking: the case of Islamic banks


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  • Farhad F. Ghannadian
  • Gautam Goswami
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    By 2003, there was a total of 176 Islamic banks around the globe with their total assets close to $147 billion. This article shows that this form of specialized banking may help in promoting growth in these developing economies. During the transition phase of a developing growth economy to a full fledged market based economy many structural changes are required in its financial institutions, especially since the role of a financial intermediary in supplying funds to growing new industries is crucial. At the same time, the potential for destabilization resulting from improper resource allocation, due to either faulty risk assessment or the design of the contract, could be significant. Also, this article examines the implementation of an Islamic banking system and how Islamic banks can provide liquidity and aid in the money creation process through offering transactions accounts with compensation for inflation to risk-avoiding depositors.

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    Bibliographic Info

    Article provided by Emerald Group Publishing in its journal International Journal of Social Economics.

    Volume (Year): 31 (2004)
    Issue (Month): 8 (July)
    Pages: 740-752

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    Handle: RePEc:eme:ijsepp:v:31:y:2004:i:8:p:740-752

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    Postal: Emerald Group Publishing, Howard House, Wagon Lane, Bingley, BD16 1WA, UK

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    Keywords: Banking; Economics; Islam; Law; Risk management;


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    Cited by:
    1. Asma Abdul Rehman & Omar Masood, 2012. "Why do customers patronize Islamic banks? A case study of Pakistan," Qualitative Research in Financial Markets, Emerald Group Publishing, Emerald Group Publishing, vol. 4(2/3), pages 130-141.
    2. Adel Ahmed, 2010. "Global financial crisis: an Islamic finance perspective," International Journal of Islamic and Middle Eastern Finance and Management, Emerald Group Publishing, Emerald Group Publishing, vol. 3(4), pages 306-320, November.
    3. Mohammad Abdelkarim Almumani, 2013. "Impact of Managerial Factors on Commercial Bank Profitability: Empirical Evidence from Jordan," International Journal of Academic Research in Accounting, Finance and Management Sciences, Human Resource Management Academic Research Society, International Journal of Academic Research in Accounting, Human Resource Management Academic Research Society, International Journal of Academic Research in Accounting, Finance and Management Sciences, vol. 3(3), pages 298-310, July.
    4. Dr. Kassim Dakhlallah Author_Email: & Dr. Hela Miniaoui, 2011. "Islamic Banks Vs. Non Islamic Ethical Dimensions," 2nd International Conference on Business and Economic Research (2nd ICBER 2011) Proceeding 2011-389, Conference Master Resources.


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