Document Details

Document Type : Article In Conference 
Document Title :
Credit Creation and Control: an Unresolved Issue in Islamic Banking
"توليد" ومراقبة الائتمان: إشكال عالق لدى المصارف الإسلامية
 
Subject : Credit Creation and Control: an Unresolved Issue in Islamic Banking 
Document Language : English 
Abstract : This paper deals with a still unresolved issue - credit creation and control - in an interest free banking system. The available literature on the subject is scanty, controversial and inconclusive. The paper holds that credit creation per se is not un-Islamic; the essential point is how credit is generated and used. It argues that credit creation cannot be banished; it is an imperative for frictionless adjustment of money supply to unavoidable fluctuations in its demand in modern economies. It seeks to correct the misunderstanding in the literature that banks create credit ex nihilo. Demand for money apart, fiscal policies and foreign exchange transaction erode the credit controlling power of the central banks. The paper blames major difficulties including those of credit creation and control on the evolution of Islamic banking on the same pattern as its mainstream counterpart and suggests some structural modifications. Finally, it finds the conventional weapons of credit control inefficacious for use in an interest free banking system and suggests the inclusion of a ratio of cash to bank advances among them. The paper has some important technical and policy implications. 
Conference Name : 7th International Conference on Islamic Economics 
Duration : From : 24-3-1429 AH - To : 26-3-1429 AH
From : 1-3-2008 AD - To : 3-3-2008 AD 
Publishing Year : 1429 AH
2008 AD 
Number Of Pages : 14 
Article Type : Article 
Conference Place : King Abdulaziz University, Jeddah 
Organizing Body : Islamic Economics Research Center 
Added Date : Thursday, July 1, 2010 

Researchers

Researcher Name (Arabic)Researcher Name (English)Researcher TypeDr GradeEmail
زبير حسنHasan, Zubair ResearcherDoctoratezubair@iiu.edu.my

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