Perspectives on Fractional Reserve Banking and Money Creation/Production through the Lenses of Legal and Religious Moral Precepts and Ethics

Mejd Aures Benlala ()
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Mejd Aures Benlala: Department of Economics, University of Batna 1, Algeria

Perspectives of Law and Public Administration, 2023, vol. 12, issue 1, 5-30

Abstract: TodayÕs financial and banking systems are built on fractional reserve banking. This article sheds light on the role of commercial banks with regards to money creation/production under this system of fractional reserve banking. After exploring the nature of the process of money creation/production, the research paper diligently scrutinizes this process through the lenses of legal and religious moral precepts and ethic. The article concludes, with solid supporting arguments, that money creation/production under fractional reserve banking is immoral, ethically wrong and harmful at both individual and societal levels, with numerous legal and religious violations at its core.

Keywords: commercial banks; fractional reserve banking; Islamic banking; legal and religious precepts; money creation. (search for similar items in EconPapers)
JEL-codes: E31 E41 E42 E51 G21 K34 P48 (search for similar items in EconPapers)
Date: 2023
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Persistent link: https://EconPapers.repec.org/RePEc:sja:journl:v:12:y:2023:i:1:p:5-30

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