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.

Bidabad, Bijan, New Operational Islamic Banking System, Volume One, Theoretical Foundations, Lap Lambert Academic Publishing, OmniScriptum GmbH & Co. KG, 2014, ISBN: 978-3-659-54463-7.
http://www.amazon.com/Rastin-Banking-Operational-Theoretical-Foundations/dp/3659544639/ref=sr_1_2?s=books&ie=UTF8&qid=1402563518&sr=1-2
http://pub.npdr.ir/product/rastin-banking/
Bidabad, Bijan, New Operational Islamic Banking System, Volume Two, Applicational Issues, Lap Lambert Academic Publishing, OmniScriptum GmbH & Co. KG, 2014, ISBN: 978-3-659-55210-6.
http://www.amazon.com/Rastin-Banking-II-Operational-Application/dp/3659552100/ref=sr_1_1?s=books&ie=UTF8&qid=1404643353&sr=1-1
http://pub.npdr.ir/product/rastin-banking-volume-ii/
Bidabad, Bijan, Economic-juristic analysis of usury in consumption and investment loans and contemporary jurisprudence shortages in exploring legislator commandments. Proceeding of the 2nd International Islamic Banking Conference. The Monash University of Malaysia. 9-10 September 2004. Reprinted in: National Interest, Journal of the Center for Strategic Research, Vol. 2, No. 1, winter 2006, pp. 72-90. Tehran, Iran. Republished in (revised): International Journal of Islamic Business & Management, 3(2), 1-15, 2019.
https://www.cribfb.com/journal/index.php/ijibm/article/view/275
http://www.bidabad.com/doc/reba-en.pdf
Bidabad, Bijan, Non-Usury Bank Corporation (NUBankCo), The Solution to Islamic banking, Proceeding of the 3rd International Islamic Banking and Finance Conference, The Monash University, KL, Malaysia, 16-17 November, 2005. International Journal of Shari’ah and Corporate Governance Research, 2(1), 53-66, 2019.
https://www.cribfb.com/journal/index.php/ijscgr/article/view/276
http://www.bidabad.com/doc/NUBankCo-en.pdf
Bidabad, Bijan, Mahmoud Allahyarifard. IT role in fulfillment of Profit & Loss Sharing (PLS) mechanism. Proceeding of the 3rd International Islamic Banking and Finance Conference, The Monash University, KL, Malaysia, 16-17 November, 2005. International Journal of Islamic Banking and Finance Research, 3(2), 44-59, 2019.
https://www.cribfb.com/journal/index.php/ijibfr/article/view/274
http://www.bidabad.com/doc/english-pls-5.pdf
http://www.bidabad.com/doc/pls-it-en.ppt
Bidabad, Bijan, Mahmoud Allahyarifard. Implementing IT to Fulfill Profit & Loss Sharing Mechanism. Islamic Finance News (IFN), Vol. 3, Issue 3, 6, February 2006, pp. 11-15.
http://www.bidabad.com/doc/summery-pls-it-1.pdf
Bidabad, Bijan; Mahmoud Allahyarifard. Assets and Liabilities Management in Islamic Banking. Proceeding of the 3rd International Conference on Islamic banking and Finance, Risk Management, Regulation and Supervision, Bidakara, Jakarta, Indonesia, 23-26 February, 2010. pp. 396-413. International Journal of Islamic Banking and Finance Research, 3(2), 32-43, 2019. Retrieved from:
https://www.cribfb.com/journal/index.php/ijibfr/article/view/272
http://www.bidabad.com/doc/alm-english.pdf
Bidabad, Bijan. Non-Usury Banking Fits to Obama's Change Strategy, the Solution to Revive the Economy.
http://www.bidabad.com/doc/PLS-paper-en-5.pdf
Bidabad, Bijan, Mahmoud Allahyarifard. The Executive Mechanism of Profit and Loss Sharing (PLS) Banking. 2009.
http://www.bidabad.com/doc/PLS-banking-Executive-Mechanism.pdf
Bidabad, Bijan, Mahmoud Allahyarifard. IT Based Usury Free Financial Innovations. Proceeding of ECDC 2010, 5th International Conference on e-Commerce in Developing Countries: with focus on e-Banking & e-Insurance. ECDC 2010, 15-16 September 2010.
http://www.bidabad.com/doc/non-usury-finance-it-en.pdf
Bidabad, Bijan, Mahmoud Allahyarifard. Usury-Free Bonds and Islamic Central Banking Monetary Instruments. 2010.
http://www.bidabad.com/doc/Islamic-banking-bond-en.pdf
Bidabad, Bijan, Stabilizing Business Cycles by PLS Banking and Ethic Economics. 2010.
http://www.bidabad.com/doc/pls-business-cycles-en.pdf
Bidabad, Bijan, Mahmoud Allahyarifard. Accounting Procedures for Profit and Loss Sharing (PLS) Banking. 2010.
http://www.bidabad.com/doc/PLS-accounting-en.pdf
Bidabad, Bijan, Abul Hassan, Ben Ali Mohamed Sami, Mahmoud Allahyarifard. Interest-Free Bonds and Central Banking Monetary Instruments. International Journal of Economics and Finance. Vol. 3, no. 3, Aug 2011, pp.234-241.
http://www.ccsenet.org/journal/index.php/ijef/article/download/11665/8300
Bidabad, Bijan, Fluctuations and Business Cycles Prevention by New Financial Instruments and Banking Structure Reform. 2011.
http://www.bidabad.com/doc/Fluctuations-and-Cycles.pdf
Bidabad, Bijan, Mudarebah Financial Sharing (MFS). Journal of Islamic Economics, Banking and Finance, JIEBF, Volume - 10, Number - 1, January - April 2014, pp. 56-68.
http://www.bidabad.com/doc/mfs-paper-en.pdf
http://ibtra.com/pdf/journal/v10_n1_article3.pdf
Bidabad, Bijan, Joalah Financial Sharing (JFS). Journal of Islamic Economics, Banking and Finance, Volume-12, No. 1, January-March, 2016, pp. 33-48.
http://www.bidabad.com/doc/jfs-paper-en.pdf
http://ibtra.com/pdf/journal/v12_n1_article2.pdf
Bidabad, Bijan,Interest-Free Treasury Bonds (IFTB), 2011.
http://www.bidabad.com/doc/interest-free-t-bond-en.pdf
http://www.bidabad.com/doc/iftb-en.pptx
Bidabad, Bijan, Interest-Free Treasury Bonds (IFTB), Islamic Finance and Legal Clarifications, 2011. International Journal of Islamic Business & Management, 3(1), 21-29, 2019.
http://www.bidabad.com/doc/interest-free-t-bond-feqhi-en.pdf
https://www.cribfb.com/journal/index.php/ijibm/article/view/258/353
Bidabad, Bijan, Abul Hassan, Ben Ali Mohamed Sami, Mahmoud Allahyarifard. Interest-Free Bonds Financial Innovation, A Monetary Instrument for Economy at Crisis. Journal of Economic Cooperation and Development (JECD). 32, 1, 2011, 55-70.
http://www.sesric.org/jecd/jecd_articles/ART10102201-2.pdf
Bidabad, Bijan, Deposits and Loans Interest Rates Lag Structure and Business Cycles (Case Study of United States). 2011.
http://www.bidabad.com/doc/Interest-Rates-Lags-and-Cycles.pdf
Bidabad, Bijan, Installment Financial Sharing (IFS): A Financial Subsystem of Rastin PLS Banking. International Journal of Islamic Banking and Finance Research, 3(1), 28-42, 2019.
https://www.cribfb.com/journal/index.php/ijibfr/article/view/267
http://www.bidabad.com/doc/ifs-paper-en.pdf
Bidabad, Bijan, Abul Hassan, Does Interest Rate Form Business Cycle, 2011.
http://www.bidabad.com/doc/interest-rate-cycle.pdf
Bidabad, Bijan, Rent Financial Sharing (RFS). Journal of Islamic Economics, Banking and Finance, 2014.
http://www.bidabad.com/doc/rfs-paper-en.pdf
http://ibtra.com/pdf/journal/v10_n2_article2.pdf
Bidabad, Bijan, Rastin Social Takaful (RST). Journal of Islamic Economics, Banking and Finance, JIEBF, Volume - 11, Number - 1, January - March 2015, pp.: 13-23.
http://ibtra.com/pdf/journal/v11_n1_article1.pdf
http://www.bidabad.com/doc/rst-paper-en.pdf
Bidabad, Bijan, Mortgage Securitization System (MSS), A Complementary System of Rastin Banking. International Journal of Law and Management (IJLMA), Vol. 59 Issue: 6, pp.778-783, 2017. Emerald Group Publishing Limited
https://doi.org/10.1108/IJLMA-05-2016-0045
http://www.bidabad.com/doc/mss-paper-en.pdf
Bidabad, Bijan, Bail Financial Sharing (BFS): A Financial Subsystem of Rastin PLS Banking. Bank Melli Iran, Tehran, Iran, 2014. International Journal of Islamic Banking and Finance Research, 3(1), 21-27, 2019.
https://www.cribfb.com/journal/index.php/ijibfr/article/view/266
http://www.bidabad.com/doc/bfs-paper-en.pdf
Bidabad, Bijan, Rastin Personal Security (RPS). Journal of Islamic Economics, Banking and Finance, JIEBF, Volume - 11, Number - 2, April - June 2015, pp. 47-61.
http://ibtra.com/pdf/journal/v11_n2_article3.pdf
http://www.bidabad.com/doc/rps-paper-en.pdf
Bidabad, Bijan, Joint Stock Company with Variable Capital (JSCVC), International Journal of Law and Management (IJLMA), Emerald Group Publishing Limited, Vol. 56, Iss: 4, pp.302 – 310, 2014.
http://dx.doi.org/10.1108/IJLMA-09-2012-0031
http://www.bidabad.com/doc/vjsc-paper-en.pdf
Bidabad, Bijan, Rastin Profit and Loss Sharing (PLS) Base System. Journal of Islamic Economics, Banking and Finance, pp. 32-57, Vol. 9, No. 4, Oct-Dec 2013.
http://ibtra.com/pdf/journal/v9_n4_article2.pdf
http://www.bidabad.com/doc/pls-base-en.pdf
Bidabad, Bijan, Money Laundering Detection System (MLD), A Complementary System of Rastin Banking, Journal of Money Laundering Control, Vol. 20 Issue: 4, pp. 354-366, 2017.
https://doi.org/10.1108/JMLC-04-2016-0016
http://www.bidabad.com/doc/mld-paper-en.pdf
Bidabad, Bijan, Nikos Mastorakis, General Characteristics of Rastin Banking. Proceeding of the 3rd International Conference on Economics, Political, Law and Fiscal Sciences (EPLS '14), World Scientific and Engineering Academy and Society (WSEAS). Transilvania University of Brasov, Brasov, Romania, June 26-28, 2014.
http://www.bidabad.com/doc/rastin-bank-general-en.pdf
http://www.bidabad.com/doc/rastin-bank-general-en.ppt
Bidabad, Bijan, A glance at Rastin Banking, 2013.
http://www.bidabad.com/doc/rastin-bank-glance-en.pdf
Bidabad, Bijan, Rastin Banking, New Operational Islamic Banking System (A bird's eye view). Islamic Finance News (IFN), Vol. 10, Issue: 28, 17, July, 2013, pp. 16-18.
http://www.bidabad.com/doc/rastin-bank-bird-eye-view-en.pdf
Bidabad, Bijan, Islamic Monetary Policy, 2013. International Journal of Islamic Banking and Finance Research, 3(2), 1-16, 2019.
https://www.cribfb.com/journal/index.php/ijibfr/article/view/269
http://www.bidabad.com/doc/islamic-monetary-policy-en.pdf
Bidabad, Bijan, Rastin Certificate Market (RCM), Complementary System of Rastin Banking, 2013. International Journal of Islamic Business & Management, 3(1), 35-43, 2019.
https://www.cribfb.com/journal/index.php/ijibm/article/view/260
http://www.bidabad.com/doc/rastin-bank-rcm-en.pdf
Bidabad, Bijan. Sovereign Wealth Fund Asset and Liability Management by Rastin Banking Financial Instruments (Rastin Certificates and Rastin Swap Bonds), First National Development Fund of Iran (NDFI) International Conference (NIC2013) - Sovereign Wealth, Asset Allocation and Risk Management, Kish Island, Persian Gulf, Iran, NIC 2013, 27-28 October 2013.
http://www.bidabad.com/doc/swf-alm-en.pdf
Bidabad, Bijan, Mahmoud Allahyarifard, Interbank Withdrawal Protocol (IWP), Complementary System of Rastin Banking 2013. International Journal of Islamic Business & Management, 3(1), 30-34, 2019.
https://www.cribfb.com/journal/index.php/ijibm/article/view/259
http://www.bidabad.com/doc/iwp-paper-en.pdf
Bidabad, Bijan, Roohollah Mohammadi; Mahshid sherafati, Social Takaful and Qard ul-Hassanah Banking Convergences (A Functional Approach), Journal of Applied Science and Agriculture (JASA) November issue 2013.
http://www.bidabad.com/doc/takaful-en.pdf
Bidabad, Bijan, Change Management of Banking System at National Level by Rastin Banking (Knowledge Management, Empowerment, Prune and Graft, and Apprenticeship), presented at the 10th International Conference on Economics and Management, Islamic Azad University, Rasht, Iran, 2017. Review of Behavioral Aspect in Organizations and Society, 2019, 1(1), 11. Review of Behavioral Aspect in Organizations and Society, 1(1), 57-70.
https://doi.org/10.32770/rbaos.vol157-70
http://www.bidabad.com/doc/change-banking-en.pdf
http://www.bidabad.com/doc/change-banking-en.pptx
Bidabad, Bijan, Insurance Products in Rastin Banking, 2014.
http://www.bidabad.com/doc/rastin-insurance-en.pdf
Bidabad, Bijan, Abul Hassan, Nikos Mastorakis, Dynamic Lag Structure of Deposits and Loans Interest Rates and Business Cycles Formation. Proceeding of the 3rd International Conference on Economics, Political, Law and Fiscal Sciences (EPLS '14), World Scientific and Engineering Academy and Society (WSEAS). Transilvania University of Brasov, Brasov, Romania, June 26-28, 2014.
http://www.bidabad.com/doc/interest-rates-cycle-en.pdf
http://www.bidabad.com/doc/interest-rates-cycle-en.ppt
Bidabad, Bijan, Rastin Crowdfunding (RCF): A Financial Subsystem of Rastin Banking. Bank Melli Iran, Tehran, 2014. International Journal of Islamic Banking and Finance Research, 3(1), 13-20, 2019.
https://www.cribfb.com/journal/index.php/ijibfr/article/view/265
http://www.bidabad.com/doc/rcf-paper-en.pdf
Bidabad, Bijan, Rastin Group Funding (RGF): A Financial Subsystem of Rastin Banking. Bank Melli Iran, Tehran, 2014. International Journal of Islamic Banking and Finance Research, 3(1), 43-48, 2019.
https://www.cribfb.com/journal/index.php/ijibfr/article/view/268
http://www.bidabad.com/doc/rgf-paper-en.pdf
Bidabad, Bijan, Mahshid Sherafati, Bank Information Disclosure, Financial Transparency and Corporate Governance in Rastin Banking, International Journal of Shari’ah and Corporate Governance Research, 2(1), 1-13.
https://www.cribfb.com/journal/index.php/ijscgr/article/view/257
http://www.bidabad.com/doc/shafafiyat-en.pdf
Bidabad, Bijan, Mahshid Sherafati, Financial Transparency, Governance and Public Disclosure for Entrepreneur (Financial Resource Receiver) in Rastin Banking System. Tehran, Iran, 2015.
http://www.bidabad.com/doc/transparency-entrepreneur-en.pdf
Bidabad, Bijan, Azarang Amirostovar, Mahshid Sherafati, Financial Transparency, Corporate Governance and Information Disclosure of the Entrepreneur’s Corporation in Rastin Banking. International Journal of Law and Management (IJLMA), Emerald Group Publishing Limited, Vol:59, Iss:5, pp.636-651, 2017.
https://doi.org/10.1108/IJLMA-01-2016-0003
Bidabad, Bijan, Mahshid Sherafati, Proposed Regulations for Enforcement of Purports of Binding Banking Documents in Rastin Banking, Tehran, 2015.
http://www.bidabad.com/doc/rastin-bank-ejraye-asnad-en.pdf
Bidabad, Bijan, Saeed Abdollahi, Mahshid Sherafati, Enforcement of the Purports of Binding Banking Documents in Rastin Banking – Part I. International Journal of Law and Management (IJLMA), Emerald Group Publishing Limited, Vol:59, Iss:1, pp. 52-65, 2017.
https://doi.org/10.1108/IJLMA-07-2015-0041
Bidabad, Bijan, Saeed Abdollahi, Mahshid Sherafati, Enforcement of the Purports of Binding Banking Documents in Rastin Banking – Part II. International Journal of Law and Management (IJLMA), Emerald Group Publishing Limited, Vol:59, Iss:2, pp.178-191, 2017.
https://doi.org/10.1108/IJLMA-10-2015-0055
Bidabad, Bijan, Mahshid Sherafati, Sustainable Financing and Anti-Squandering Measures in Rastin Banking. International Journal of Law and Management (IJLMA), Emerald Group Publishing Limited, Vol: 59, Issue: 6, pp. 939-949, 2017.
https://doi.org/10.1108/IJLMA-04-2016-0037
http://www.bidabad.com/doc/esraf-bank-resource-en.pdf
Bidabad, Bijan, Serial Commitments Clearance (SCC) in Rastin Banking. International Journal of Law and Management (IJLMA), Vol. 57, Iss: 6, 2015, pp. 600-609, Emerald Group Publishing Limited.
http://dx.doi.org/10.1108/IJLMA-02-2015-0007
http://www.bidabad.com/doc/scc-paper-en.pdf
Bidabad, Bijan, Rastin Swap Deposit (RSD): A Financial Account of Rastin Banking. Tehran, 2015. International Journal of Islamic Banking and Finance Research, 3(2), 17-23, 2019.
https://www.cribfb.com/journal/index.php/ijibfr/article/view/270
http://www.bidabad.com/doc/rsd-paper-en.pdf
Bidabad, Bijan, Rastin Swap Card (RSC): A Financial Instrument of Rastin Banking. Tehran, 2015. International Journal of Islamic Banking and Finance Research, 3(2), 24-31, 2019.
https://www.cribfb.com/journal/index.php/ijibfr/article/view/271
http://www.bidabad.com/doc/rsc-paper-en.pdf
Bidabad, Bijan, Mahshid Sherafati, Operational Ethical Banking in Rastin Banking (Professional Ethics, Audit, Inspection, Control, Monitoring and Preservation). International Journal of Law and Management (IJLMA), Emerald Group Publishing Limited, Vol: 58, Iss: 4, 2016, pp. 416-443.
http://dx.doi.org/10.1108/IJLMA-07-2015-0037
http://www.bidabad.com/doc/rastin-ethic-banking-en.pdf
Bidabad, Bijan, Mahmoud Allahyarifard, Mahshid Sherafati, Rastin Partnership Accounting, 2016.
http://www.bidabad.com/doc/rastin-mosharekat-accounting-en.pdf
Bidabad, Bijan, Abul Hassan, Dynamic Lag Structure of Deposits and Loans Interest Rates and Business Cycles Formation. Journal of Financial Regulation and Compliance, Vol. 25 Issue: 2, pp.114-132, 2017.
http://dx.doi.org/10.1108/JFRC-09-2016-0078
Bidabad, Bijan, General Regulatory Framework in Rastin Profit and Loss Sharing Banking (Part I-Operational Context). Journal of Business and Finance in Emerging Markets, JBFEM, [S.l.], v. 1, n. 1, p. 11-26, may 2018. ISSN 2580-5568.
https://doi.org/10.32770/jbfem.vol111-26
http://www.bidabad.com/doc/rastin-regulatory-en-I.pdf
Bidabad, Bijan, General Regulatory Framework in Rastin Profit and Loss Sharing Banking (Part II-Legal Groundwork). Journal of Business and Finance in Emerging Markets, JBFEM, JBFEM, [S.l.], v. 1, n. 2, p. 109-126, nov. 2018. ISSN 2580-5568.
https://doi.org/10.32770/jbfem.vol1109-126
http://www.bidabad.com/doc/rastin-regulatory-en-II.pdf
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.
https://doi.org/10.32770/jbfem.vol251-66
http://www.bidabad.com/doc/rastin-regulatory-en-III.pdf
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
Section
Original Articles/Review Articles/Case Reports/Short Communications