Islamic banking

Date of Award




Degree Name

Doctor of Philosophy (Ph.D.)

First Committee Member

John Devereux, Committee Chair


Most of the articles written about Islamic banking are concerned with the theoretical foundation of an interest-free banking system, and how the financial system works in that environment. But no one has attempted to explore whether an interest-free financial system is essential for Islamic countries if a high proportion of savers and investors in those countries do not participate in the interest-bases system, and consider the involvement in any interest-based transaction a sin. The consequences of less efficient financial system are critical. First, there is a high probability that productive projects are forgone. Second, accumulation of savings is inefficient. Third, the interest rate as monetary instrument will not function as policy makers intend.Using a sample of 1313 banks consist of all commercial banks operating in 40 countries drawn from a new database, I show that interest-based banking systems operating in Islamic countries are inefficient compared to their counterparts operating in non-Islamic countries.


Economics, Finance; Business Administration, Banking

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