Absence Of Interbank Loan Market And Banking Short-Term Liquidity Management Mechanisms: The Most Pressing Problems Of The Islamic Finance Model

Magomet Yandiev ()
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Magomet Yandiev: Department of Economics, Lomonosov Moscow State University
Authors registered in the RePEc Author Service: Magomet Iandiev ()

No 15, Working Papers from Moscow State University, Faculty of Economics

Abstract: The Islamic finance model is sufficiently well specified at the “bank-to-client” level, but does not regulate the “central bank-to-bank” and “bank-to-bank” relationships. This paper proposes a concrete Shariah-compatible mechanism for setting up an Islamic interbank loan1 market and managing Islamic bank liquidity, which allows a segregation of Islamic and non-Islamic finance. Islamic banks should as a minimum delink from LIBOR and other traditional reference rates and come up with their own financial benchmarks.

Keywords: Islamic banks; central bank; liquidity; interbank lending market; money market (search for similar items in EconPapers)
JEL-codes: E5 F3 G1 (search for similar items in EconPapers)
Pages: 6 pages
Date: 2015-02
New Economics Papers: this item is included in nep-ban and nep-mac
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Citations: View citations in EconPapers (1)

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