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Title of Thesis

Nadeem Inayat
Institute/University/Department Details
Department of Economics/ University of the Punjab
Number of Pages
Keywords (Extracted from title, table of contents and abstract of thesis)
islamic banking, non-interest banking system, keynesian framework, riba, loanable-funds model, bohm bawerk‚€™s, islamization of banking, financing, interest

The purpose of this research is firstly, to assess if the process of Islamization of Banking in Pakistan was initiated with proper planning and secondly, to evaluate the implication of elimination of interest from the economy.

In terms of our deductions and results obtained it is evident that since the introduction of Non-Interest Banking system in Pakistan there has hardly been any progress in the sphere of Islamization of banking. The adoption of a fragmented approach to Islamize banking without fully envisaging the complexities of the matter and attending to the prerequisites of the Islamic Economic Order has resulted in only the change of nomenclature and not the essence.

In order to evaluate the implications of equity-based Islamic Banking system we have constructed a macro economic model based upon micro economic foundations, under Keynesian framework. The replacement of interest by variable return has demonstrated the system to be operational with the desirable properties of uniqueness and stability of equilibrium both in static and dynamic analysis. The system is also more sustainable to shocks and market failures.

The major result of this work has evidently reflected the fact that revolutionary changes require extra ordinary efforts and measures at all levels and a complete support from all segments of the society. Although one of the most important and significant requirements of an Islamic economic system is the prohibition of interest from the economy, it is not the conclusive condition for successful and meaningful operation of the system. What is basically required is honesty and dedication in pursuit of Divine Will.

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1313.37 KB
S. No. Chapter Title of the Chapters Page Size (KB)
1 0 Content
86.71 KB
2 1 Introduction 1
70.23 KB
3 2 Rational Of Prohibiting Riba 6
191.08 KB
  2.1 Advent Of Islam And Its Aims Prohibition Of Riba In The Quran 7
  2.2 Analysis And Chronology Of Riba Verses 12
  2.3 Literal Meanings Of Riba 14
  2.4 Interpretation Of Riba In Pakistan & Other Muslim Societies 17
  2.5 Conclusions 20
  2.6 References 23
4 3 Admissible (Islamic) Modes Of Financing In Pakistan 24
256.85 KB
  3.1 Islamic Banking 24
  3.2 Historic Perspective Of Islamization Efforts In Pakistan 28
  3.3 Admissible (Islamic Modes Of Financing And Their Implementation By Banks 33
  3.4 Present Functioning Of Banks In Relation To Their Compatibility With Shariah 41
  3.5 Prerequisites Of Islamic Banking 43
  3.6 Conclusions 45
  3.7 References 47
5 4 Theories Of Interest 49
264.37 KB
  4.1 Real Model Of Interest Rate 50
  4.2 Monetary Loanable-Funds Model 53
  4.3 Liquidity Preference Theory 57
  4.4 General Equilibrium View Of Real And Monetary Theories 59
  4.5 Comparison Between Liquidity Preference And Loanable Funds Theories Of Interest 60
  4.6 Bohm Bawerk‚€™s Theory Of Interest 64
  4.7 Fisher‚€™s Theory Of Interest 68
  4.8 Conclusions 73
  4.9 References 74
6 5 Theoretical Model Of Islamic Banking 75
438.59 KB
  5.1 Difference Between The Systems 75
  5.2 Macro- Economic Model 96
  5.3 Conclusions 121
  5.4 References 123
7 6 Policy Implications 125
85.99 KB
  6.1 Conclusions 131
  6.2 References 132
8 7 Conclusions 133
100.66 KB
  7.1 Consolidated References 140