DOES FRACTIONAL RESERVE BANKING SYSTEM EXIST IN INDONESIAN ISLAMIC BANKING?

Modeling the Textbook Fractional Reserve Banking System

Banking systems based on the fractional reserve banking process have been in use for several hundred years. However textbook models of these systems do not include either loan repayments or loan defaults, and predict the evolution over time of a stable, asymptotically converging process governing credit and money supplies to the general economy for which there is no empirical evidence in long r...

International Journal of Excellence in Islamic Banking and Finance Islamic Banking Service Quality and Withdrawal Risk: The Indonesian Experience

Inputs and Outputs in Islamic Banking System

Evaluation of performance and productivity is among the fundamental concepts inmanagement. In order to achieve their goals, organizations must evaluate theirperformance. One of the important stages of performance appraisal is evaluation oforganization’s efficiency. Banks, financial and credit institutions are among the mostimportant organizations of every economic system, because every activity...

Islamic Shari'a Concepts governing Islamic Banking finance

Introduction It is submitted that accepting Islamic Banking within the western regulatory framework has encountered many impediments. A conventional bank is an institution that holds a banking license issued by banks' regulatory authorities which authorizes the chartered institution to conduct fundamental banking services such as receiving deposits, making loans, providing and saving account se...

On the social usefulness of fractional reserve banking

In this paper we argue that if monetary policy has insufficient deflation, private agents have incentives to set up alternative payment systems like fractionally backed bank deposits, which pay interest on the means of payment. In a competitive environment with free entry, these alternative systems are inherently fragile in the sense that they are subject to socially costly bank runs. These soc...