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Perspectives on Fractional Reserve Banking and Money Creation/Production through the Lenses of Legal and Religious Moral Precepts and Ethics

Author

Listed:
  • Mejd Aures BENLALA

    (Department of Economics, University of Batna 1, Algeria)

Abstract

TodayÕs financial and banking systems are built on fractional reserve banking. This article sheds light on the role of commercial banks with regards to money creation/production under this system of fractional reserve banking. After exploring the nature of the process of money creation/production, the research paper diligently scrutinizes this process through the lenses of legal and religious moral precepts and ethic. The article concludes, with solid supporting arguments, that money creation/production under fractional reserve banking is immoral, ethically wrong and harmful at both individual and societal levels, with numerous legal and religious violations at its core.

Suggested Citation

  • Mejd Aures BENLALA, 2023. "Perspectives on Fractional Reserve Banking and Money Creation/Production through the Lenses of Legal and Religious Moral Precepts and Ethics," Perspectives of Law and Public Administration, Societatea de Stiinte Juridice si Administrative (Society of Juridical and Administrative Sciences), vol. 12(1), pages 5-30, March.
    • Handle: RePEc:sja:journl:v:12:y:2023:i:1:p:5-30
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    More about this item

    Keywords

    commercial banks; fractional reserve banking; Islamic banking; legal and religious precepts; money creation.;
    All these keywords.

    JEL classification:

    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
    • E41 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Demand for Money
    • E42 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Monetary Sytsems; Standards; Regimes; Government and the Monetary System
    • E51 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Money Supply; Credit; Money Multipliers
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • K34 - Law and Economics - - Other Substantive Areas of Law - - - Tax Law
    • P48 - Political Economy and Comparative Economic Systems - - Other Economic Systems - - - Legal Institutions; Property Rights; Natural Resources; Energy; Environment; Regional Studies

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