Journal of Money & Economy
Volume:6 Issue: 3, Spring 2012

The main purpose of this paper is to trace epistemological roots of conventional and Islamic finance. Based on an extensive literature review, this paper aims to highlight, explain, and discuss an ideal conventional and Islamic financial system. The ideal conventional financial system is discussed in light of various writings by Smith and Arrow, based on Arrow-Debreu model. On the other hand, the Islamic financial system is discussed in light of Qur‘anic verses based on which the system is built.The findings show that the present Islamic finance industry evolved from conventional finance to address a market failure in conventional finance in terms of unmet market demand for Islamic finance products. However, since most practitioners in Islamic finance were bankers and market players from the conventional background, they developed, more often than not, products that are similar to conventional ones albeit with Shari‘ah compatibility. Hence, the focus was primarily on avoiding riba while ignoring the first part of the verse 275 of surah al-Baqarah which first ordains exchange contracts. Although the crisis had limited impact on IFI, it is due to the similar nature between the two that IFI is also subjected to the shocks in the conventional financial system. A way forward would be to move towards more risk-sharing products which indicate a robust link between the strength of the financial system and economic growth.

Analyzing central bank communication during financial crises, we draw on a surprisingly informative parallel between management of natural disasters such as earthquakes on one hand, and the corresponding communication infrastructure and social interaction during financial turmoil, on the other. The role of social and emotional behavior thereof points to the importance of interpersonal communication for the dissemination of central bank information in a turbulent context. Overall, our research results inform central banks‘ attempts to coordinate the desideration of monetary policy, prudential supervision and financial stability in a framework that takes into account social and psychological challenges in the financial markets and the society.

Determining the driving forces of economic growth has a paramount importance in economic studies. Early studies suggested physical capital accumulation as the main driving force of growth. However, the recent studies try to resolve the flaws of neo classical school on growth by expanding the concept of capital equipment and machinery to a wider range of human knowledge, on one hand, and institutions, rules and regulations as social capital, on the other. In fact, this strain of economics has become more prevailed recently. The present study, using Hausman, Pritchett and Rodrik (2005) methodology, aims to investigate the impact of rules and regulation reforms of developmental plans on the acceleration of Iran economic growth over 1338-1386 (1960-2008) period. The results of three econometric methods including Gombit, Logit and Probit models show that economic reforms of the developmental plans in Iran's economy has had a significant positive impact on growth.

The paper highlights gaps in key areas of legislation, regulation and supervision, standard-setting of Shari‘ah-compliance and pinpoints areas where improvement is desirable to ensure stability in the Islamic banking and finance sector. The comparative analysis focuses on 11 selected Muslim countries (Malaysia, Iran, Bahrain, Saudi Arabia, Pakistan, Turkey, Indonesia, Sudan, Kuwait, U.A.E and Jordan) and two non-Muslim countries (Singapore and the United Kingdom). The findings suggest that the legislation for Islamic financial institutions in most countries is formulated in the image of conventional banking. Some countries lack proper legal framework with some notable issues including the lack of a dedicated Islamic banking law (Saudi Arabia), few laws relating to corporate governance (Iran, Bahrain, Kuwait, U.A.E). However, to date, most of countries follow the regulations of their domicile as well as International Accounting Standards (IAS). The paper also suggests that due to various difficulties to harmonize Islamic banking practices, facilitating cluster or regional convergence may be the first step towards greater harmonization for this sector.

This paper analyzes the financial soundness indicators in Iran`s banking system. In the first part it emphasis on asset quality measure by the non-performing loans ratio. The non-performing loans grew rapidly in last decade in Iran‘s banking system and it reached higher than 25 percent of total loans in 2010. We conclude that NPLs increase have impact on real part of economy in the concept of credit crunch and bank lending decline when NPLs exceeds a specific level of total loans. This paper also analyzes the relationship between three financial soundness indicators (asset quality, capital adequacy and profitability) and key macroeconomic, bank-specific, and structural variables. The results show that asset quality and capital adequacy are influenced by business cycle. Lending interest rate over two previous years has a negative effect on asset quality. Capital adequacy is affected by short term deposit interest rate and changes in the exchange rate. Profitability fluctuates with inflation rate and NPLs ratio.

Due to violent and ferocious competition and global changes of new trends, directions and new ways of doing business, financial institutions grapple with new challenges and opportunities in today business. The advancement in technology, information and communication has forced banks and financial institutions into hard competition. In this new technology era, people as the customers are the elements on which the banks are concentrating to manage customer relationship. In this complicated situation, Electronic customerrelationship management(E-CRM) is seen applicatory and beneficial solution to improve customers‘ service, develop a profitable and long term relationship and retain valuable customers. E-CRM results from the consolidation of traditional CRM (Customer Relationship Management) with the e-business applications in marketplace. This research is built up from understanding the core attributes which construct the E-CRM in Iran Financial Institutions. The main reasons that this research has been chosen, is reaching the elements which have operational effect on customer satisfaction and its effect on banking performance, apprehending how business customers are led in successful relationship with banks. Furthermore, the research provides opportunity for managers to evaluate, and analyze not only their own performance in implementation of E-CRM in the financial institutions, but also identify their effectiveness and feebleness with the aim of improving better management. On the other hand, performing this study brings about the prominent comparison between managers and business customers‘ perception to offer the right service in the right manner and in the right time. This study includes the methodology, and questionnaire composition, so that its duplication by others can be performed easily.

The object of this study is to analyze the factors influencing success of Bank-issued micropayment systems in Iran. Based on an existing IS post acceptance model which considers well known factors, we focus on studying the influence of a new factor related to compulsion (direct and indirect). Our model consists of seven main factors along with ‗Direct compulsion‘ defined as a mediator variable between ―Satisfaction‖, ―Perceived Usefulness‖, ―Network Externalities‖ and ―Continuance Intension‖. 409 filled questionnaires were gathered and analyzed to check thirteen hypotheses related to our model. The collected data have been analyzed at three levels. First, some descriptive statistics are derived in order to obtain an overview of the characteristics of the sample. Second, bivariate correlations between variables are analyzed with respect to the correlation between scales of variables and mediator variables. The final stage of the analysis adopts a regression analysis in order to identify the eventual existence of association and relationship between the dependent and independent variables.