Islamic finance revisited: conceptual and analytical issues from the perspective of conventional economics
AbstractAfter a brief recent empirical sketch of Islamic finance, the paper turns to its main theoretical and conceptual purpose. It seeks to relate the concepts of Islamic and conventional finance, and to examine certain important questions which arise from the interaction between these systems. The paper is written from the perspective of conventional modern economics, as the authors are students of the latter. The paper discusses the main tenets of Islamic finance, as well as those of modern economics, including the implications of zero interest rates and those of Modigliani and Miller theorems. The most notable finding of this paper is that John Maynard Keynes’ analysis of employment, interest and money provides, inadvertently, the best rationale for some of the basic precepts of Islamic finance. The paper concludes that there is no inevitable conflict between the two systems and cooperation between them is eminently desirable and feasible.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by University Library of Munich, Germany in its series MPRA Paper with number 39007.
Date of creation: 14 Nov 2011
Date of revision: 10 Apr 2012
Publication status: Published in Cambridge University CBR Working Paper Working Paper 430.2012(2012): pp. 1-35
Islamic Finance; Moral Hazard; Keynes; Zero Interest Rates; Usuary;
Other versions of this item:
- Sheng, Andrew & Singh, Ajit, 2013. "Islamic Finance Revisited: Conceptual and Analytical Issues from the Perspective of Conventional Economics," MPRA Paper 53036, University Library of Munich, Germany.
- Sheng, A. & Singh, A., 2012. "Islamic Finance Revisited: Conceptual and Analytical Issues from the Perspective of Conventional Economics," ESRC Centre for Business Research - Working Papers, ESRC Centre for Business Research wp430, ESRC Centre for Business Research.
- A13 - General Economics and Teaching - - General Economics - - - Relation of Economics to Social Values
- E40 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - General
- B41 - Schools of Economic Thought and Methodology - - Economic Methodology - - - Economic Methodology
This paper has been announced in the following NEP Reports:
- NEP-ALL-2012-06-05 (All new papers)
- NEP-ARA-2012-06-05 (MENA - Middle East & North Africa)
- NEP-CWA-2012-06-05 (Central & Western Asia)
- NEP-HPE-2012-06-05 (History & Philosophy of Economics)
- NEP-PKE-2012-06-05 (Post Keynesian Economics)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Beck, Thorsten & Demirguc-Kunt, Asli & Merrouche, Ouarda, 2010.
"Islamic vs. conventional banking : business model, efficiency and stability,"
Policy Research Working Paper Series
5446, The World Bank.
- Beck, Thorsten & Demirgüç-Kunt, Asli & Merrouche, Ouarda, 2013. "Islamic vs. conventional banking: Business model, efficiency and stability," Journal of Banking & Finance, Elsevier, vol. 37(2), pages 433-447.
- Pasquale Scaramozzino & Giancarlo Marini, 2000. "Social time preference," Journal of Population Economics, Springer, vol. 13(4), pages 639-645.
- Jared Rubin, 2011. "Institutions, the Rise of Commerce and the Persistence of Laws: Interest Restrictions in Islam and Christianity," Economic Journal, Royal Economic Society, Royal Economic Society, vol. 121(557), pages 1310-1339, December.
- Myers, Stewart C. & Majluf, Nicolás S., 1945-, 1984. "Corporate financing and investment decisions when firms have information that investors do not have," Working papers 1523-84., Massachusetts Institute of Technology (MIT), Sloan School of Management.
- Klaus Gugler & Dennis C. Mueller & B. Burcin Yurtoglu, 2003. "The Impact of Corporate Governance on Investment Returns in Developed and Developing Countries," Economic Journal, Royal Economic Society, Royal Economic Society, vol. 113(491), pages F511-F539, November.
- Chang, Ha-Joon, 2000. "The Hazard of Moral Hazard: Untangling the Asian Crisis," World Development, Elsevier, vol. 28(4), pages 775-788, April.
- Mirakhor, Abbas & Krichene, Noureddine, 2009. "The Recent Crisis: Lessons for Islamic Finance," MPRA Paper 56022, University Library of Munich, Germany.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Ekkehart Schlicht).
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.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with 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 profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.