The impact of new financing instruments on the equipment and allocation of Islamic banking resources

Document Type : Original Article

Authors

1 Associate Prof., Department of Economics, Tabriz Branch, Islamic Azad University, Tabriz, Iran

2 Department of Economics, Tabriz Branch, Islamic Azad University, Tabriz, Iran

3 Prof., Department of Economics, Faculty of Economics and Social Sciences, Bu Ali Sina University, Hamadan, Iran

4 PhD in economics Department of Economics, Tabriz Branch, Islamic Azad University, Tabriz, Iran

Abstract

The use of new Islamic financing instruments is one of the logical ways to improve the performance of banks in Islamic countries. Islamic instruments are considered as the simplest method of financing and liquidity, which, while relying on physical assets and reducing credit risks, have no legal problems and the experience of recent years indicates the high efficiency of these instruments in strengthening the performance of the country's banks. Accordingly, in the present study, the effect of new financing tools (through rent sukuk and Murabaha bonds) on improving of equipment and allocation at Islamic banking resources in Iran is examined during the period 2012: 4 to 2021: 2 (based on quarterly data) using Markov Switching econometric technique. The results show that sukuk bonds in both regimes have a positive effect on banking facilities, but nevertheless, the impact coefficients are not very significant. Therefore, we must look for ways to attract foreign and domestic investment in order to issue different types of sukuk in order to increase the resources of banks.

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