Econometric modeling shows that the rate of interest does not have any significant influence on the demand for money and on the investment function in a contemporary Islamic society. Money demand in Muslim countries is primarily determined by income. Muslim liquidity behavior does not conform to the Keynesian model. As for non-Islamic countries whose economies resemble the economies of the Muslim world, the influence of interest rates is different the interest rate does in fact significantly shape the money demand and the investment function in such economies. Islam's legal code bans interest on all categories of loans. The analysis shows that Muslims are living by shari`a condemnation of interest despite the fact that national laws do not prohibit interest. The statistics show that ending interest in Muslim lands would not raise large difficulties.
Year
1990
Country
Saudi Arabia
Language
English
Abstract
English
ISSN/ISBN
1018-7383
No. of Pages
pp.3-23
Volume
2
Select type of work
Name of the Journal
CIS Program Old
CIS publications
No
CIS Thesis
No