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Finance for development and islamic banking

  • Islamic Economics
  • Published:
Intereconomics

Abstract

Islamic banking, where fixed interest contracts are banned, needs if it is to be successful to operate within a type of financial system in which bank-industry relationships are sufficiently close and pervasive for profit- and loss-sharing arrangements to be acceptable to both sides. However, the creation of such a business culture is likely to be difficult.

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References

  1. See, for example, I. Karsten: Islam and financial intermediation, IMF Staff Papers, 29, 1982, pp. 108–42; F. L. Pryor: The Islamic economic system, in: Journal of Comparative Economics, 9/1985, pp. 197–223; N. A. Saleh: Unlawful Gain and Legitimate Profit in Islamic Law, Cambridge University Press, 1986; Z. Iqbal and A. Mirakhor: Islamic Banking, IMF Occasional Paper No. 49; S. Ahmed: Islamic banking and finance: a review essay, in: Journal of Monetary Economics, 24/1989, pp. 157–67; and the collection of papers in M. S. Khan and A. Mirakhor (eds.): Theoretical Studies in Islamic Banking and Finance, Institute for Research and Islamic Studies, Houston 1987.

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  5. For surveys of the relevant literature see C. A. E. Goodhart: Money, Information and Uncertainty, 2nd edition, London 1989, chapter V; M. K. Lewis: Theory and practice of the banking firm, in: C. J. Green and D. T. Llewellyn (eds.): Financial Markets and Institutions, Oxford 1991; and J. Chant: The new theory of financial intermediation, in: K. Dowd and M. K. Lewis (eds.): Current Issues in Financial and Monetary Economics, London 1992.

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  9. See, for example, P. Collier and C. Mayer: The assessment: financial liberalisation, financial systems and economic growth, in: Oxford Review of Economic Policy, 5/4, 1989, p. 1–12; and J. E. Stiglitz: Financial markets and development, in: Oxford Review of Economic Policy, 5/4, 1989, pp. 55–68. For a similar argument on the liberalising Eastern European economies see J. Corbett and C. Mayer, op. cit. Financial Reform in Eastern Europe: progress with the wrong model, in: Oxford Review of Economic Policy, 7/4, 1991, pp. 57–75.

  10. I. Karsten, op. cit. Islam and financial intermediation, IMF Staff Papers, 29, 1982, pp. 108–42.

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  13. C. Mayer, op. cit. New issues in corporate finance, in: European Economic Review, 32/1988, pp. 1167–89.

  14. M. S. Khan and A. Mirakhor: Islamic Banking..., op. cit. experiences in the Islamic Republic of Iran and in Pakistan, in: Economic Development and Cultural Change, 38/1990, pp. 353–75.

  15. See T. Naughton and B. Shanmugam: Interest-free banking: a case study of Malaysia, in: National Westminster Bank Quarterly Review, February 1990, pp. 16–32; and M. Ariff: Islamic banking in Malaysia: framework, performance, and lessons, in: Journal of Islamic Economics, 2/1989, pp. 67–78.

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Authors and Affiliations

  1. University of St. Andrews, UK

    David Cobham

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  1. David Cobham
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Cobham, D. Finance for development and islamic banking. Intereconomics 27, 241–244 (1992). https://doi.org/10.1007/BF02928053

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