Document Details

Document Type : Article In Journal 
Document Title :
Towards an Interest-Free Islamic Economic System
نحو نظام اقتصادي لاربوي إسلامي
 
Subject : Articles  
Document Language : English 
Abstract : Rigorous mathematical techniques are used to compare the Islamic financial system based on variable return scheme (VRS) with the traditional one based on fixed return scheme (FRS). It is shown, under certain assumptions which include risk aversion on the part of investors, that the Pareto optimal contract is the VRS. Also VRS spreads risks more evenly than FRS allowing more risk taking in the economy. The domination of the real world by FRS, i.e. debts contracts, is shown to be caused mainly by informational asymmetry and higher monitoring Costs in case of VRS. But these costs are not prohibitive. The more effective the methods of monitoring and the higher the level of honesty on the part of economic agents, the more superior the Islamic financial system would prove to be in practice. 
ISSN : 1018-7383 
Journal Name : Islamic Economics Journal 
Volume : 1 
Issue Number : 1 
Publishing Year : 1409 AH
1989 AD 
Number Of Pages : 35 
Article Type : Article 
Added Date : Sunday, October 11, 2009 

Researchers

Researcher Name (Arabic)Researcher Name (English)Researcher TypeDr GradeEmail
وقار مسعود خانWAQAR MASOOD KHANResearcher  

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