Paper presented to the International Seminar on Fİscal Policy and Development Planning in Islamic Economy organised by I.I.I.E. at Islamabad in July 1986. It is not correct to argue that permission of credit sale and sale on advance payment is a recognition of the concept of time value of money. Time preference is a rational concept but it does not necessitate riba However, discounting is acceptable in Islam on the basis of different levels of funcertainty attached to the future. For economists. Undocumented.
Comments on V. Nienhaus’s paper (JRIE, 1:1, Summer 1983). Discusses Nienhaus’s two main conclusions about profitability of Islamic banks. The rate of profit-sharing of Islamic banks need not be determined with reference to interest banks. However, when banks are conducting the two types of business (i.e. the Islamic as well as interest-based), like the PLS counters in Pakistan, the Nienhaus position may be correct. The second conclusion, that Islamic banks would be less profitable than interest banks, may hold in the short run but need not be true over a long period. For economists. Analytical.
Argues that aggregate consumption level in an Islamic economy will be lower than if Muslims were consuming under un-Islamic premises. Builds a macro model to show that even if there is any chance of a short-run decline in the aggregate savings level due to Islamisation of the economy, this adverse effect will be wiped out and the long-run savings and growth path will be higher than if it were a non-Islamic economy. Suggests that Muslim governments besides legisl- ating Islamisation should educate people in Islamic values to avoid short-run negative effects of their endeavours. For Muslim economists. Analytical. Mathematical. Documented.
Monetary and Financial Theory and Institutions
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