Islamic monetary economics and institutions : theory and practice
This edited volume explores theoretical and empirical issues related to monetary economics and policy in the Islamic financial system. Derived from the Conference on Islamic Monetary Economics and Institutions: Theory and Practice 2017 held in Malé, Maldives, the enclosed papers highlights several option for authorities and regulatory bodies regarding monetary policy and regulation, as well as discussing how Islamic monetary policy effects growth, financial stability and resilience to shocks in practice. The inter-linkage between Islamic monetary policy and other markets are also explored. The subject of Islamic economics has gained considerable attention in the last four decades with the emergence of Islamic financial institutions around the world. This phenomenon has motivated economists to develop a comprehensive theoretical framework of modern monetary economics for Islamic economic system. An important characteristic of the Islamic economic system is the abolition of interest from the financial system. Islamic monetary economics is distinguished from conventional monetary economics due to the absence of interest. Therefore, under the Islamic economic system, monetary policy has to depend on other tools. In the early theoretical literature on Islamic monetary economics, many have discussed the role of money in Islamic economics system, while the number of empirical studies on Islamic monetary economics is a relatively new phenomenon. According to Islamic scholars, there are three main goals of Islamic monetary policy: a) economic well-being with full employment and optimum rate of economic growth; b) socioeconomic justice and equitable distribution of income and wealth and c) stability in the value of money. Hence, the Islamic monetary policy has several socioeconomic and ethical implications. Featuring regional case studies, this book serves as a valuable resource for academics, scholars, practitioners and policy makers in the areas of Islamic economics and finance
1 online resource (214 pages)
9783030240059, 9783030240042, 9783030240066, 9783030240073, 3030240053, 3030240045, 3030240061, 303024007X
1122463942
Intro; Foreword; Preface; References; Contents; About the Guest Editor; About the Editors; Contributors; List of Figures; List of Tables; Chapter 1: Introduction; 1.1 Overview; 1.2 Theoretical Foundation of Monetary Policy from Islamic Perspectives; 1.3 Monetary Policy, Policy Instruments, and Financial Stability in Islamic Economy; 1.4 Conclusion; References; Part I: Theoretical Foundation of Monetary Policy from Islamic Perspectives; Chapter 2: Monetary Economics and Macroeconomic Model for an Islamic Economy; 2.1 Introduction; 2.2 Macroeconomic Model for an "Islamic" Economy 2.3 Monetary Economics in an "Islamic" Economy2.3.1 Demand for Money in "Islamic" Economy; 2.3.2 Money Demand Function in "Islamic" Economy; 2.3.3 Monetary Policy in "Islamic" Economy; 2.4 Islamic Perspective on Monetary Policy for Present-Day Muslim Economies; 2.4.1 Cost of Holding Money in Islamic Perspective; 2.4.2 Money Demand Management in Present-Day Muslim Economies; 2.4.3 Money Supply in Present-Day Muslim Economies; 2.4.4 Equilibrium in Money Market; 2.4.5 Need for Monetary Policy in Present-Day Muslim Economies; 2.5 Outline of Monetary Policy for Present-Day Muslim Economy 2.5.1 Strategy for Gradually Reducing the Trading of Debt-Based Financial Instruments in Secondary Market2.5.2 Shari'ah Supervision of Monetary Policy; 2.6 Conclusion; Appendix I: Beyond Market Economics in an Islamic Economy; Appendix II: Macroeconomic Objectives of an Islamic Economy; References; Chapter 3: Islamic Monetary Economics: Insights from the Literature; 3.1 Introduction; 3.2 Literature Review; 3.2.1 A Brief History of Monetary Evolution and Early Islamic Monetary Policy; 3.3 Islamic Monetary Economics: Equity vs. Interest Rate 3.4 Demand and Supply of Money in Islamic Monetary System3.5 Framework of Interest-Free Monetary Policy; 3.6 Empirical Literature on Islamic Monetary Economics; 3.7 Implications; 3.8 Conclusion; References; Chapter 4: On Normative and Logical Foundations of Monetary Policy; 4.1 Introduction; 4.2 Why Monetary Authorities Target Inflation?; 4.3 Monetary Authorities Don't Care About Socioeconomic Implications; 4.4 Is It Sensible to Control Inflation?; 4.5 Unemployment and Inflation Trade-Off and Its Moral Implications; 4.6 Inflation Targeting and Its Moral Implication 4.7 The Cost Channel of Monetary Transmission Mechanism4.8 Cost Versus Demand Channels and Employment; 4.9 Monetary Policy and Income Inequality; 4.10 Conclusion; References; Chapter 5: Historical and Ideological Peculiarity of the Monetary Institutions: Islamic and Austrian School's Perspectives; 5.1 Introduction; 5.2 Historical and Cultural Particularity of an Institution; 5.3 Origin of Modern Monetary System; 5.4 Austrian School of Economics on Modern Monetary System; 5.5 Money Creation Through FRB System and Islamic Banks (IBs); 5.5.1 If Financing Is Asset Backed Will It Cause Inflation?
5.5.2 Status of Private Ownership