Oil and Water Do Not Mix, or: Aliud Est Credere, Aliud Deponere

Bagus, Philipp; Howden, David; Gabriel, Amadeus

doi:10.1007/s10551-014-2087-x

Cited by 16 publications

(12 citation statements)

References 20 publications

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“…(Iqbal and Mirakhor, 2013) The 100% RBS concept is flourished with an aim to omit the irregular deposit and fixed it so that in the future it will called as the regular deposit (Yeager, 2010;Hulsmann, 2004;Cochran and Call, 1998;De Soto, 1995a). At the end, if the regular deposit is implemented the mismatch problem between the deposit and loan then it can be reduced accordingly Bagus, Gabriel and Howden, 2015;Bagus and Howden, 2009).…”

Section: Literature Review the Irregular Deposit And The Reserve Bankmentioning

confidence: 99%

“…Unfortunately, the epistemological error happens and the banks are now using the theory of irregular deposit rather than regular deposit ( Bagus, Gabriel and Howden, 2015;Bagus, Gabriel and Howden, 2016;Barnett II and Block, 2009;Nair, 2013;De Soto, 1998;Syamlan, 2016). The fallacy of the deposit theory not only happens in conventional banks but also in Islamic bank.…”

Section: Introductionmentioning

confidence: 99%

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Does Dual Banking System in Indonesia Differentiate Investment Account Requirement?

Syamlan

2018

TIFBR

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This paper aims to propose a model of investment account based on Islamic Financial Services Board guiding principles. The research figures out some factors affecting the process of deploying investment account, the proposed model, cost-benefit analysis as well as the steps to be taken by Islamic banking stakeholders to install the model in the future. Having reviewed many litetatures related to irregular deposit, investment account as well as the institutional theory, the study found that the adoption of investment account heavily relies on the political factor applied by Bank Indonesia. Law No. 21 Year 2008 that regulates Indonesian Islamic Banking clause 35 stated that Bank Indonesia has coercive power to drive the accounting and governance standard for the Indonesian Islamic banking. Other actors such as Financial Services Authority, National Sharia Board, and Indonesia Deposit Insurance Corporation also do affect the regulation on Investment Account. This paper informs the policy makers to set different regulation on investment account within the practice of dual banking system.

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Section: Literature Review the Irregular Deposit And The Reserve Bankmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

Does Dual Banking System in Indonesia Differentiate Investment Account Requirement?

Syamlan

2018

TIFBR

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“…This legal privilege is notably the case today as other depositories of fungible goods (e.g., grain silos or oil mills) are not allowed to operate with fractional reserves (Williams 1984;Huerta de Soto 2009: 125, 129), or the law turns a blind eye to banks not abiding by the law as is the case in Germany (Köhler 2013: 916, 918). (Bagus et al 2015 give a further elaboration of the ways that banks are legally privileged.) Second, credit expansion unbacked by real savings in a fractional-reserve banking system is fundamentally different from maturity mismatching.…”

Section: Why Maturity Mismatching May Be Beneficial But Unbacked Credmentioning

confidence: 99%

Entrepreneurial Error Does Not Equal Market Failure

2016

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Barnett and Block (forthcoming) claim that Bagus and Howden (2012b) support indirectly the concept of market failure. In this paper we show that maturity mismatching in an unhampered market may imply entrepreneurial error but cannot be considered a market failure. We demonstrate why fractional-reserve banking leads to business cycles even if there is no central bank and why maturity mismatching does not per se lead to clusters of errors in a free market. Finally, we assure that, in contrast to the examples provided by Barnett and Block, maturity mismatching does not imply the creation of two incompatible contracts due to the fungible nature of money.

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“…Countries resting on a civil law tradition are ambivalent on the issue. For example, Germany de facto chooses to not enforce its laws prohibiting the use of a deposit by a bank (Köhler 2013, 916-920), while in Spain such legal prohibition is only partially enforced (Bagus, Howden and Gabriel 2015;Huerta de Soto 2006, 125-129). At any rate, legal ambiguities do not negate the underlying legal necessity that depositories and depositors must have the same end in mind when forming a contract (i.e., there must be a "meeting of the minds").…”

mentioning

confidence: 99%

“…At any rate, legal ambiguities do not negate the underlying legal necessity that depositories and depositors must have the same end in mind when forming a contract (i.e., there must be a "meeting of the minds"). Second, loan contracts must establish a maximum duration before it must be reversed (even if only implicitly, as in Bagus, Howden and Gabriel 2015). A good "loaned" for no time is a deposit.…”

mentioning

confidence: 99%