Banking on interest

Central Banking in an Interest-Free Banking System

There is a vast literature on regulatory, monetary and institutional aspects of traditional banking system. This is not true for the interest-free Islamic banking framework. In this paper, the functions and tools of central banking in an Islamic framework are evaluated, and suggestions for adapting and revising the currently used tools of central banking for the Islamic central banking are made...

study on muzarebah and its applicability on interest-free banking

does muzarebah include all commercial activity orincludes only sale? in jurist opinion muzarebah is validonly under two conditions: 1. being with money or in cashand 2. commercial activity for interest should be sale. it isvague about meaning of commercial activity. inaccordance with the aim of muzarebah legislation andgeneral provision it seems we can extend the subject ofmuzarebah to all lega...

Banking on Deposits: Maturity Transformation without Interest Rate Risk

We show that in stark contrast to conventional wisdom, maturity transformation does not expose banks to significant interest rate risk. Aggregate net interest margins have been near-constant over 1955–2013, despite substantial maturity mismatch and wide variation in interest rates. We argue that this is due to banks’ market power in deposit markets. Market power allows banks to pay deposit rate...

Making Interest-free Banking System More Efficient with Regards to Interest Rate

Interest Rate Risk in the Banking Book

Over the past decade the Basel Committee on Banking Supervision (the Basel Committee) has released a number of consultative documents discussing the management and supervision of the interest rate risk inherent in a bank’s balance sheet. The Committee’s most recent release on this topic forms part of the proposed New Basel Capital Accord (the New Accord), which comes into effect in 2007, and de...