Non-Usury Banking Fits the Change Strategy: The Solution to Revive the Economy

  • Bijan Bidabad Professor, Economics and Chief Islamic Banking Advisor, Bank Melli, Iran
Keywords: Usury, Islamic Banking, Finance, Rastin Banking, Profit and Loss Sharing

Abstract

Based on the working in different fields of sciences for a long time, a solution to change the structure of banking products as a solution to economic crises is proposed. By sharing the risks economically this solution can make economic integrity among all economic sectors.In this paper, we are going to introduce a new Islamic financial institution with elaborated economic and financial characteristics. «Non-Usury Bank Corporation» (NUBankCo) is defined in a way that depositors are the shareholders of the Bank. This corporation is a new kind of shared ownership corporation, which its shareholders are deposit holders and their deposits work as corporation’s equities. The defined bank can perform non-usury operations, and by designing a behavioral model, it is shown that NUBankCo can draw an environment that the welfare of society is to be maximized. Mobility of deposit resources in NUBankCo is less than conventional banks, and there are fewer conflicts between large and small shareholders/depositors and limits the emergence of shareholders’ cartels and thus huge sudden outflow of funds which creates bankruptcy crises.

References

The Persian and English documents of Rastin Banking, including a detailed explanation of this banking method, are accessible through http://www.bidabad.com in full texts in Persian and English languages. “Draft of Rastin Banking Bill” and its “Operational Bylaw of Rastin Banking” can also be accessed through the cited link.

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Bidabad, Bijan, General Regulatory Framework in Rastin Profit and Loss Sharing Banking (Part III-Auxiliary Provisions). Journal of Business and Finance in Emerging Markets, JBFEM, May 2019, Vol 2, No. 1, pp. 51-65. ISSN 2580-5568.
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Published
2019-06-01
How to Cite
Bidabad, B. (2019). Non-Usury Banking Fits the Change Strategy: The Solution to Revive the Economy. American Economic & Social Review, 5(1), 49-61. https://doi.org/10.46281/aesr.v5i1.283

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