Modeling money demand under the profit-sharing banking scheme: Some evidence on policy invariance and long-run stability

Bank-level stability factors and consumer confidence – A comparative study of Islamic and conventional banks’ product mix

“…The stability contributed by Islamic banking may not be influenced by policy and other exogenous shocks. Kia and Darrat (2003) compare the Islamic bank product mix and concludes that it provides a most stable and invariant policy function, while Kaleem (2000) too supports on the stability of the Islamic monetary instruments in a dual banking system in Malaysia as less vulnerable to crises Our last measure for consumer confidence levels proxied by deposit and customer funding over total liabilities indicates higher confidence levels for Islamic banks in this region which operates both banks in parallel.…”

“…There are numerous inferences that the product mix of Islamic banks' provide more stability (Čihák and Hesse, 2008;Haque et.al 2009;Aziz, 2009, Kia and Darrat 2003, Kaleem, 2000 and not affected by crisis because the nature of Islamic banks product mix does, for example does not trade in collateralized debt obligation market blamed for igniting the current bank crisis (Borio, 2008) particularly among European and American banks during the recent crisis.…”

Impact of interest rates on Islamic and conventional banks: the case of Turkey

“…Kia and Darrat (2007) refer to two major reasons for positive impact of interest-free banking system upon stability in the demand for money. These are speculation from a demand perspective and revaluation of balance sheet items from a banking perspective.…”

“…Darrat (2002) investigates the Islamic banking system in Iran and Pakistan while Kia (2002) evaluates the place of Islamic banking in Iranian national economy. Kia and Darrat (2007) also studies how the system works in Iran. All these studies present empirical findings suggesting that demand for money is more stable in Islamic banking.…”

The Role of Islamic Banks in the Transmission of Liquidity Shocks Across Countries

“…Accordingly, a higher exchange rate reduces export prices. Therefore, it leads to a higher demand for exports (Kia and Darrat 2007). As a result, the higher demand for resources creates pressure on domestic prices and hence increases loans in Islamic banks.…”