Enforcing the Interest-free Banking Law, the Missing Link in Achieving the Goals of Banking System in the Islamic Republic of Iran

Although the passing of the interest-free banking law in Iran has paved the way for advancing towards Islamic banking, some problems have arisen in enforcing it. The findings of some researches do not support the idea that interest-free banking in Iran has positive effect on such variables like economic growth. This paper reviews the question whether or not enforcing the law on interest-free banking is among the concerns of the banking system in the country. The paper’s hypothesis is that since the time when the law on interest-free banking was passed in 1363, the banking system has shown no concern for its implementation. To evaluate this hypothesis, the method of hierarchical analysis for assessing the questionnaires concerning the opinions of 316 experts who have long experience and academic qualifications in banking was used. The results of this evaluation show that conducting free- interest banking transactions and achieving its goals have been a matter of concern to no one of the banks in the country. Stimulating this process requires extending the knowledge of Islamic banking and developing the culture of obeying the law.