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Islamic Price Index Offer and Effects of Consumer Price Index on Islamic Banks

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  • Dinc, Yusuf

Abstract

There are arguments on presenting positive revenues at a rate of inflation in lending transactions in Islamic economics based on inflation. Many scholars agree that offering extra payment at a rate of inflation is applicable according to their Islamic economics and interest-free practices. However, these scholars do not reference which inflation index to take account. Moreover, there is no consensus on the units that will be taken into consideration in general inflation indices. Although the viewpoint claiming that offering positive revenues at a rate of inflation is not unfavorable in the Islamic economics" is open to debates if a new Consumer Price Index (CPI) that is specific to this system is not presented, the system will face problematic situations. The findings that were obtained in Turkey may be generalized for the other regions of the world. This research offers a new and unique Consumer Price Index for Islamic economics. Also with this research the effects of CPI on participation banks'net profit share margin (NPSM) regressed with an econometric model. And the results show correlation between NPSM and CPI. CPI is a significant determinant and effects net profit share margin of participation banks.

Suggested Citation

  • Dinc, Yusuf, 2016. "Islamic Price Index Offer and Effects of Consumer Price Index on Islamic Banks," MPRA Paper 85334, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:85334
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    File URL: https://mpra.ub.uni-muenchen.de/85334/1/MPRA_paper_85334.pdf
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    References listed on IDEAS

    as
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    More about this item

    Keywords

    Islamic finance; Islamic banking; Islamic Consumer Price Index; Inflation; Performance;
    All these keywords.

    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages

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