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Monetary stability and interest-free banking: the case of Iran

Author

Listed:
  • Mahmood Yousefi
  • Sohrab Abizadeh
  • Ken McCormick

Abstract

Previous research has suggested that Islamic banking systems may be more stable than Western systems. However, this contention has only been tested empirically for the case of Tunisia, a country with no significant history of Islamic banking. This paper replicates the study done on Tunisia for the case of Iran, a country with some history of Islamic banking. The results are mixed, with some evidence both for and against the hypothesis of greater stability for Islamic banking. It is suggested that a good deal more work must be done to prove claims about the relative stability of Islamic banking.

Suggested Citation

  • Mahmood Yousefi & Sohrab Abizadeh & Ken McCormick, 1997. "Monetary stability and interest-free banking: the case of Iran," Applied Economics, Taylor & Francis Journals, vol. 29(7), pages 869-876.
  • Handle: RePEc:taf:applec:v:29:y:1997:i:7:p:869-876
    DOI: 10.1080/000368497326525
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    References listed on IDEAS

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    1. Pryor, Frederic L., 1985. "The islamic economic system," Journal of Comparative Economics, Elsevier, vol. 9(2), pages 197-223, June.
    2. Ahmad, Mushtaq & Khan, Ashfaque H., 1990. "A reexamination of the stability of the demand for money in pakistan," Journal of Macroeconomics, Elsevier, vol. 12(2), pages 307-321.
    3. Ingo Karsten, 1982. "Islam and Financial Intermediation (L'Islam et l'intermédiation financière) (Islamiso e intermediación financiera)," IMF Staff Papers, Palgrave Macmillan, vol. 29(1), pages 108-142, March.
    4. Alesina, Alberto & Summers, Lawrence H, 1993. "Central Bank Independence and Macroeconomic Performance: Some Comparative Evidence," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 25(2), pages 151-162, May.
    5. Hall, Thomas E & Noble, Nicholas R, 1987. "Velocity and the Variability of Money Growth: Evidence from Granger-Causality Tests: A Note," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 19(1), pages 112-116, February.
    6. Driscoll, Michael J & Lahiri, Ashok, K, 1983. "Income-Velocity of Money in Agricultural Developing Economies," The Review of Economics and Statistics, MIT Press, vol. 65(3), pages 393-401, August.
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    Cited by:

    1. Amine Amar & Ikrame Ben Slimane & Makram Bellalah, 2017. "Are Non-Conventional Banks More Resilient than Conventional Ones to Financial Crisis?," Working Papers hal-01455752, HAL.
    2. Cagri S. Kumru & Saran Sarntisart, 2013. "Implications of Alternative Banking Systems," ANU Working Papers in Economics and Econometrics 2013-601, Australian National University, College of Business and Economics, School of Economics.
    3. Khairul Anuar & Shamsher Mohamad & Mohamed Eskandar Shah, 2014. "Are Deposit and Investment Accounts in Islamic Banks in Malaysia Interest-Free? هل ودائع وحسابات الاستثمار في البنوك الإسلامية في ماليزيا غير قائمة أو خالية من الفائدة ؟," Journal of King Abdulaziz University: Islamic Economics, King Abdulaziz University, Islamic Economics Institute., vol. 27(2), pages 29-58, July.
    4. Amir Kia, 2002. "Interest Free and Interest-Bearing Money Demand: Policy Invariance and Stability," Working Papers 0214, Economic Research Forum, revised 09 May 2002.
    5. Amir Kia & Ali F. Darrat, 2003. "Modeling Money Demand under the Profit-Sharing Banking Scheme: Evidence on Policy Invariance and Long-Run Stability," Carleton Economic Papers 03-13, Carleton University, Department of Economics, revised Apr 2007.
    6. Narayan, Paresh Kumar & Phan, Dinh Hoang Bach, 2019. "A survey of Islamic banking and finance literature: Issues, challenges and future directions," Pacific-Basin Finance Journal, Elsevier, vol. 53(C), pages 484-496.

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