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

Hassan Ghassan

MPRA Paper from University Library of Munich, Germany

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 share’s investor in SR model α* realize the indifference of the financial institution toward SR and FR models, there exists α

Keywords: Banks; Stochastic Return; Fixed Return; α-sharing; Mean Preserving Spread. (search for similar items in EconPapers)
JEL-codes: G2 P5 (search for similar items in EconPapers)
Date: 2012-07
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Published in Journal of Islamic Economics, Banking and Finance 3.8(2012): pp. 9-20

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Related works:
Working Paper: Banking Stability System: Does it Matter if the Rate of Return is Fixed or Stochastic? (2018) Downloads
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