This paper investigates the financial stability, measured by z-score technique in Islamic banking system of 20 countries from 2000 to 2010. We compare the stability of Islamic banks to the commercial banks, before and after the financial crisis. The empirical results from panel estimation show that: a) the large Islamic banks are more stable than the large commercial banks and furthermo...

Michael Woodford’s paper “Inflation Targeting and Financial Stability” presents a case for tighter monetary policy, “leaning against the wind,” in order to reduce the probability of a financial crisis. However, the introduction of financial-stability instruments (macroprudential instruments) that have a more direct effect on leverage than the policy rate allows monetary-policy and financial-sta...

As a response to the recent global financial crisis, we witnessed a period of unprecedented central bank activism. This situation contrasts with what we experienced during the “great moderation”. This dramatic change has led many observers to discuss reevaluating the role of central banks in the new era. On the one hand, some arguments posit that central banks had forgotten a crucial task in th...