IDEAS home Printed from https://ideas.repec.org/a/idn/jimfjn/v6y2020i3cp531-554.html
   My bibliography  Save this article

The Introduction Of Waqf Into Fractional And Full Reserve Banking Systems To Achieve Economic Stability

Author

Listed:
  • Omer Faruk Tekdogan

    (Ministry of Treasury and Finance, Turkey)

Abstract

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.

Suggested Citation

  • Omer Faruk Tekdogan, 2020. "The Introduction Of Waqf Into Fractional And Full Reserve Banking Systems To Achieve Economic Stability," Journal of Islamic Monetary Economics and Finance, Bank Indonesia, vol. 6(3), pages 531-554, August.
    • Handle: RePEc:idn:jimfjn:v:6:y:2020:i:3c:p:531-554
    DOI: https://doi.org/10.21098/jimf.v6i3.1132
    as

    Download full text from publisher

    File URL: https://jimf-bi.org/index.php/JIMF/article/view/1132/816
    Download Restriction: no
    File URL: https://libkey.io/https://doi.org/10.21098/jimf.v6i3.1132?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    More about this item

    Keywords

    Islamic economics; Fractional reserve banking; Full reserve banking; Waqf; Agent-based modeling;
    All these keywords.

    JEL classification:

    • C63 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Computational Techniques
    • E51 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Money Supply; Credit; Money Multipliers
    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
    • P4 - Political Economy and Comparative Economic Systems - - Other Economic Systems

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:idn:jimfjn:v:6:y:2020:i:3c:p:531-554. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Lutzardo Tobing or Jimmy Kathon (email available below). General contact details of provider: https://edirc.repec.org/data/bigovid.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.