Privilege Sukuk As A Tool For Endogenous And Equilibrium Profit Rates

Endogenous or exogenous money and interest rates are important issues in economic schools and its determination in the Islamic economic system is a key point for other economic issues. In some countries, regulatory and non-market setting of interest rates is one of the problems that leads to financial repression. In an Islamic economy, the profit rate is endogenous and non-market determination is contrary to jurisprudence and Sharia law. However, profit rate liberalization requires conditions that are not currently available in the Iranian banking system. This article tries to show that the expansion of Privilege Sukuk to different sectors, which are used in a limited way in the Iranian banking system, and the formation of a market for it can create the ground for the discovery and application of equilibrium profit rate in the banking system. Describing and jurisprudential examination of Privilege Sukuk shows that these sukuk are an efficient as well as legitimate Islamic financial instrument.As a result, in addition to establishing an endogenous equilibrium profit rate, the expansion of Privilege Sukuk leads to the elimination or reduction of bank corruption, limitation of bankchr('39')s power on profit rates, facilitates the supervision and control of the central bank and to response automatically to economic conditions.