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Towards an Economic Theory of Islamic Finance Regulation

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Abstract

Islamic finance has several comparative advantages over conventional finance. Since they are related to efficiency, stability and other macroeconomic benefits, they cannot be easily internalized by Islamic bankers. Islamic bankers have no incentive to stick to the Islamic finance paradigm and instead tend to mimic conventional finance. Regulation is therefore required to modify their behavior in order to allow the Islamic finance industry to enjoy its advantages. This paper attempts to modify the economic theory of bank regulations towards that aim.

Suggested Citation

  • Al-Jarhi, Mabid, 2014. "Towards an Economic Theory of Islamic Finance Regulation," MPRA Paper 66744, University Library of Munich, Germany, revised 2014.
    • Handle: RePEc:pra:mprapa:66744
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    File URL: https://mpra.ub.uni-muenchen.de/66744/1/20.pdf
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    References listed on IDEAS

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    10. Al-Jarhi, Mabid Ali, 2005. "The Case For Universal Banking As A Component Of Islamic Banking," Islamic Economic Studies, The Islamic Research and Training Institute (IRTI), vol. 13, pages 2-65.
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    Cited by:

    1. Al-Jarhi, Mabid, 2016. "An economic theory of Islamic finance," MPRA Paper 72698, University Library of Munich, Germany.
    2. Al-Jarhi, Mabid, 2016. "The Nature of Money in Modern Economy – Implications and Consequences," MPRA Paper 72238, University Library of Munich, Germany, revised 15 Jun 2016.
    3. Mabid Ali al-Jarhi, 2016. "The Nature of Money in Modern Economy – Implications and Consequences: Stephen Zarlenga and Robert Poteat طبيعة المال في الاقتصاد الحديث - الآثار والتبعات: ستيفن زارلينجا وروبرت بوتيت," Journal of King Abdulaziz University: Islamic Economics, King Abdulaziz University, Islamic Economics Institute., vol. 29(2), pages 75-79, January.

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    More about this item

    Keywords

    Islamic banking; Islamic finance; Islamic monetary and financial economics; regulations banking; finance;
    All these keywords.

    JEL classification:

    • E4 - Macroeconomics and Monetary Economics - - Money and Interest Rates
    • E5 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit
    • E6 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook

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