Relative stability of interest-free economy
Other Title(s)
الاستقرار النسبي في اقتصاد لا ربوي
Source
Journal of Research in Islamic Economics
Issue
Vol. 3, Issue 1 (31 Dec. 1985), pp.3-12, 10 p.
Publisher
King Abdulaziz University Scientific Publishing Center
Publication Date
1985-12-31
Country of Publication
Saudi Arabia
No. of Pages
10
Main Subjects
Financial and Accounting Sciences
Topics
Abstract EN
Islamic financial facilities like profit and loss sharing (PLS) are flexible enough to provide built-in stabilizers to the investment process.
The amplitude of all phases of the business cycle will be smaller in an Islamic economy compared to advanced capitalist economies where the fixity of the fluctuating short term interest rates account for the unstable and cyclical behaviour of investment.
This is demonstrated by emphasising the dependence of investment decisions on financing and capital valuation (following Gordon, Tobin, and Minsky) then using a qualitative model of two differenttial equations to express financing conditions and investment behaviour.
PLS financing makes payment commitments a function of cash flows and strongly discourages the financing of speculative borrowers - thus, eliminating the main sources of volatility in capitalist economies.
American Psychological Association (APA)
Chishti, Salim. 1985. Relative stability of interest-free economy. Journal of Research in Islamic Economics،Vol. 3, no. 1, pp.3-12.
https://search.emarefa.net/detail/BIM-436309
Modern Language Association (MLA)
Chishti, Salim. Relative stability of interest-free economy. Journal of Research in Islamic Economics Vol. 3, no. 1 (1985), pp.3-12.
https://search.emarefa.net/detail/BIM-436309
American Medical Association (AMA)
Chishti, Salim. Relative stability of interest-free economy. Journal of Research in Islamic Economics. 1985. Vol. 3, no. 1, pp.3-12.
https://search.emarefa.net/detail/BIM-436309
Data Type
Journal Articles
Language
English
Notes
Includes bibliographical references : p. 11
Record ID
BIM-436309