The Comparative Analysis of Economic Consequences of Conventional Banking System and Qarz-ul-hassana Institution

Document Type : Original Article

Authors

1 The late Professor of Economics, Department of Economics, University of Isfahan

2 Associate Professor of Economics, University of Isfahan

3 Assistant Professor of Economics, Yasouj University

Abstract

In this paper we analyse the economic aspects of qarz-ul-hassana in compare with  the conventional monetary system. Recent studies in this field mostly have followed a juriseprudence and legal approach. But this study follows a theoretical economic approach for explaining the economic consequences of  conventional banking system. We show that this system by encouraging the social time preference and intreset rate, leads to unemployment, by credit creation leads to inflation, and by distorting the present and intertemporal allocation of resources leads to the increasing inequality. Then we argument that qarz-ul-hassana is the essential prerequisite and the complemantary of  an interest-free society. Finally it is shown that the transition from conventional monetary system to an ideal system nessesitates a foundamental and essential changes in the conventional institution and regulation of national and international monetary system in a long term process.

Keywords

Economic Strategy
Volume 7, Issue 26
October 2018
Pages 51-81

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