nep-isf New Economics Papers
on Islamic Finance
Issue of 2018‒09‒03
two papers chosen by
Halimatun Aris

  1. Banking Stability System: Does it Matter if the Rate of Return is Fixed or Stochastic? By Hassan Ghassan
  2. Türkiye'de Faizsiz Bankacılık Prensiplerine Uygun Teverruk Pazarı: Ürün İhtisas Borsası By Kazancı, Fatih

  1. By: Hassan Ghassan
    Abstract: The purpose is to compare the perfect Stochastic Return (SR) model like Islamic banks to the Fixed Return (FR) model as in conventional banks by measuring up their impacts at the macroeconomic level. We prove that if the optimal choice of investor share in SR model {\alpha}* realizes the indifference of the financial institution toward SR and FR models, there exists {\alpha} less than {\alpha}* such that the banks strictly prefers the SR model. Also, there exists {\alpha}, {\gamma} and {\lambda} verifying the conditions of {\alpha}-sharing such that each party in economy can be better under the SR model and the economic welfare could be improved in a Pareto-efficient way.
    Date: 2018–07
  2. By: Kazancı, Fatih
    Abstract: Participation banks in Turkey use the “tawarruq” method to restructure their uncollectible receivables and the “commodity murabahah” method, which is a kind of tawarruq, to manage their liquidity. All participation banks to perform these operations use the London Metal Exchange (LME). The realization of tawarruq transactions through a commodity or metal exchange to be established in Turkey has been discussed in recent years. This article is about whether the product specialization stock exchange planned to be established in 2018 can contribute to Turkish participation banking and how it should work with a model if it is used in tawarruq and commodity murabahah transactions.
    Keywords: Tawarruq, Commodity Murabahah, Product Specialization Exchange, Electronic Product Certificate
    JEL: F30 G21 G24
    Date: 2018

This nep-isf issue is ©2018 by Halimatun Aris. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, please include this notice.
General information on the NEP project can be found at For comments please write to the director of NEP, Marco Novarese at <>. Put “NEP” in the subject, otherwise your mail may be rejected.
NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.