Paper Information

Journal:   JOURNAL OF ISLAMIC ECONOMIC STUDIES   SPRING-SUMMER 2016 , Volume 8 , Number 2 (16) #L0045; Page(s) 173 To 198.
 
Paper:  THE NATURE OF BANK AND ITS IMPLICATIONS FOR ISLAMIC BANKING STUDIES
 
Author(s):  HOSSINI DOLATABADI SAYYED MAHDI*
 
* FACULTY OF ECONOMICS, TEHRAN UNIVERSITY
 
Abstract: 

The first step for designing an Islamic bank is to understand the nature and role of conventional or western bank completely. In other words, if the subject in not understood, it is impossible to infer its sentence. The current understanding of the bank nature among the Islamic banking scholars is that a western bank is a financial intermediary which collects people's savings as a deposit and offers interest or services and then makes loan with these funds and receive interest. In this approach, the loan with interest contradicts to Islamic teachings, so Islamic banking studies focus on eliminating the interest (Reba) from the arrangements and rules of conventional banking. In this paper according to the investigating the evolution of bank and its arrangements and economic literatures about banking, we show that conventional bank is an institution of money creation in an Economy, and reducing it to a financial intermediary isn't correct. So according to the role of money in an Economy and the effects of money creation of banks in it, this understanding of bank nature must be considered as a basis for designing and establishing an Islamic banking system.

 
Keyword(s): BANK, ISLAMIC BANKING, MONEY CREATION, FINANCIAL INTERMEDIARIES
 
References: 
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