EconPapers    
Economics at your fingertips  
 

Banking Stability System: Does it Matter if the Rate of Return is Fixed or Stochastic?

Hassan Ghassan ()

Papers from arXiv.org

Abstract: The purpose is to compare the perfect Stochastic Return (SR) model like Islamic banks to the Fixed Return (FR) model as in conventional banks by measuring up their impacts at the macroeconomic level. We prove that if the optimal choice of investor share in SR model {\alpha}* realizes the indifference of the financial institution toward SR and FR models, there exists {\alpha} less than {\alpha}* such that the banks strictly prefers the SR model. Also, there exists {\alpha}, {\gamma} and {\lambda} verifying the conditions of {\alpha}-sharing such that each party in economy can be better under the SR model and the economic welfare could be improved in a Pareto-efficient way.

Date: 2018-07
New Economics Papers: this item is included in nep-isf
References: View references in EconPapers View complete reference list from CitEc
Citations:

Published in Journal of Islamic Economics, Banking and Finance 8-3:9-20, 2012

Downloads: (external link)
http://arxiv.org/pdf/1807.11102 Latest version (application/pdf)

Related works:
Working Paper: Banking Stability System: Does it Matter if the Rate of Return is Fixed or Stochastic? (2012) Downloads
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:arx:papers:1807.11102

Access Statistics for this paper

More papers in Papers from arXiv.org
Bibliographic data for series maintained by arXiv administrators ().

 
Page updated 2025-03-22
Handle: RePEc:arx:papers:1807.11102