An Analysis of the Problem of Asymmetric Information in Partnership Contracts of Interest- Free Banking and the Solutions

Mahdi Toqyani / Assistant professor of economics department, Isfahan University


Saeed Samadi / Associate professor of economics department, Isfahan University                          s.samadi@ase.ui.ac.ir

Ziba Sadeghi / MA at Isfahan University                 s.samadi@ase.ui.ac.ir

Received: 2015-09-27 - Accepted: 2016-02-04


An essential feature of interest- free banking is the use of partnership contracts in financing the applicants. The real implementation of these contracts causes the banks to confront some problems, such as adverse selection and moral hazard, which are primarily rooted in the lack of symmetric information between the bank and the applicant. Using a descriptive-analytical method, this study seeks, within the framework of basic research model which comes under the theory of contracts (the aspect of the theory of motivations) to provide a clearer explanation of the problem of information asymmetry in partnership contracts and solve part of it. According to this model, when there is asymmetric information in the contracts, if the contracts serve the purposes of the different applicants with whom the bank deals are made within the framework of the principle of clarification, not only the profit expected by the bank can rise to peak level, but also the problem of adverse selection can be solved by stimulating the applicants by making contracts prepared for each particular one. These contracts, which suggest the probability of obtaining a loan from the limited resources of the banks and amount of repayment for each specific applicant, are extracted from the bank's maximization of the expected profit. In the present study, taking in to account the characteristics and conditions of signing partnership contracts, a model is proposed for these contracts by making some changes in the basic model in three stages with the aim of solving the problem of adverse selection that results from asymmetric information. 

Key words: Asymmetric information, Adverse selection, Moral hazard, Partnership contracts, Theory of contracts.

JEL: D82، E5، P4

The Factors Affecting on Citizens` Tendency towards the Domestic Consumption of the Products, A case Study on Citizens of Kashan

Ali Hossein Zadeh / Assistant professor of theology department, Kashan University               


Mohsen Niazi / Professor of sociology department, Kashan University niazim@kashanu.ac.ir

Elham Shafaei Moghadam / PhD student of Iran`s social affairs, Kashan University               

Received: 2015-10-12 - Accepted: 2016-02-14                 shafai@yahoo.com


One of the policies of Moqavemah (Resilience) economics is boosting national production and promoting domestic consumption. In this paper we deal with the effective factors on citizen`s tendency towards domestic consumption quantitatively and in a rather vast number of consumers. The data of this social survey have been collected by questionnaires. The statistical population includes all the citizens of Kashan over the age of 15 in the year 1392. Using Cochran sampling formula, 605 people were randomly chosen and analyzed. The findings show that the variable of national identity has a modest effect and 35% of the total effect is the top of list, the satisfaction of foreign products with -25% of the total effect, and the variables of satisfaction of domestic products and TV advertisements are respectively ranked in the next levels with a minimal effect. Q2 shows that the predictions of the model are satisfactory. Moreover, given what is understood from Matrix on importance-function, TV advertisements are important, but they could not have a great impact on promoting domestic consumption.

Keywords: Domestic consumption, National identity, Satisfaction with domestic products, Advertisement.

JEL: E21، P4

Economic Welfare from an Islamic Perspective

Ali Ma’suminiya / Assistant professor of the College of Economics at Kharazmi University  


 Somayeh Rashidian / PhD Student of Islamic economics, Allameh Tabatabaii University  

Received: 2015-10-27 - Accepted: 2016-02-22              s.rashidian@atu.ac.ir


In conventional economics, the aim of economic activities is to achieve welfare and prosperity that are taken equivalent to joy and happiness. This paper examines Islam's approach to economic welfare and the related concepts, such as pleasure, joy and happiness. According to the hypothesis of this research, Islam approves of reasonable welfare. The results show that Islam recognizes reasonable material welfare and aims at building an affluent Islamic society. In clarifying the optimal welfare in the view of Islam, Muslim scholars consider reasonable pleasures as superior to physical pleasures and, approving of physical pleasures, they accept them only if they are not inconsistent with reasonable pleasures. Opening the horizons of eternity for man, Islam seeks to orient material welfare towards the indescribable material and spiritual pleasures in the other world. Pleasures that are contrary to the otherworldly pleasures are deemed forbidden or blameworthy. There is a fundamental difference between the Islamic approach to welfare and the welfare in conventional economics according to which happiness is equivalent to pleasure.  Islam legitimizes a "reasonable welfare”, whereas the contemporary economics vote for what can be referred to as “unreasonable welfare". Islam sees that unreasonable welfare leads to one's ingratitude for blessings, corruption, negligence and destruction of society.

Key words: Economic welfare, Islamic economics, Islamic welfare, Hedonism, The relationship between prosperity and pleasure.

JEL: D6، I30، P4

The Nature and Function of the Philosophical
Foundations of Islamic Economics

Mohammad Javad Tavakoli / Assistant professor of the economic group, IKI Tavakoli@iki.ac.ir

Received: 2015-10-07 - Accepted: 2016-02-14


In economic literature, the terms foundations and philosophical foundations lead to conceptual and functional ambiguity. This paper seeks to resolve this ambiguity by expounding the nature and function of the foundations of contemporary and Islamic economics. Based on the research hypothesis, the philosophical foundations have production as well as orientation functions and that the foundations cannot serve as the only factor in producing Islamic economic theories. The findings of this paper which are analyzed analytically show that the lack of conceptual clarity of the term foundation can cause such problems like the gap between the theory and its foundations and ineffectiveness of philosophical foundations in some parts of the Islamic economic literature. The findings present the two views in Islamic economy literature; productive foundations and underlying principles. In this paper, I conceive the philosophical foundations in Islamic economics to have both production and orientation functions simultaneously. Based on this approach, among the triple philosophical foundations in Islamic economics, epistemological foundations have mainly orientation function and the ontological and axiological foundations have a production function. Accepting the production function of philosophical foundations, however, does not necessarily mean imposing extra burden on the foundations in the process of producing conventional and Islamic economic knowledge.

Key words: Foundations, Islamic economics, Philosophical foundations, The function of the philosophical foundations of Islamic economics.

JEL: B5, B41, P4.

The Possibility of Creating Money
by the Banking System in  an Islamic Financial System

Hossein Samsami / Assistant professor of economic department, Shahid Beheshti University           


 Fereshteh Kianpour / MA of theoretical economics, IHCS      fereshtekianpour@yahoo.com

Received: 2015-11-13 - Accepted: 2015-03-04


One of the issues in Islamic financial system is analyzing the possibility of creating money by the banking system. Based on the research hypothesis, which is studied by an analytic approach, creating money in the Islamic financial system is not legitimate. According to the researches done in the Islamic economics and mainstream economics, there are countless problems with creating money such as economic instability, recession, volatility in money supply, increase in inflation, compulsory growth, environmental degradation, exploitation of workers, corruption of democratic process, rising inequality and denying justice, social deprivation, bankruptcy of banks, imposing deposit insurance, moral hazard, worthless investment and asset bubbles. The findings of this paper, which are analyzed by a holistic -goal-oriented approach that are common in Islamic economic studies, show that creating money by the banking system leads to economic instability, failing to fulfill one`s commitment and “Akal Mal be batel”. Moreover, creating money prevents the achievement of the Islamic financial goals such as; social justice, economical growth, and price control. Consequently, creating money by the banking system in its contemporary form is not legitimate in an Islamic financial system.

Key words: Creating money, Islamic financial system, Islamic banking, Financial economics, Commercial bank.

JEL: P49, E59, P24, E58.

The Method of Discovering Development Policies with Emphasis on Martyr Sadr's Views

Amin Reza Abedinezhad Davarani / PhD in comparative philosophy, IKI                             fereshtekianpour@yahoo.com

Received: 2015-08-24 - Accepted: 2016-01-15                         


Development policies are among the most important means of the management and development of a social system. Using the analytical method, this paper deals with the question as to how these development policies can be discovered. According to the paper’s hypothesis, the discovery of these policies requires considering the principles, goals and rules and expanding martyr Sadr's discovery methodology. The findings show that development policies which represent the rules of a certain school, principles and general, practical and comprehensive rules based on a specific axiological and doctrinal system, contribute to developing a social system with the aim of achieving the hierarchical objectives. In fact, these policies are considered as intermediary between the objectives of social system and the detailed rules of the social system. The principles, objectives and rules are the three main sources for inferring development policies. Discovering, interpreting, explaining and aggregating the objectives, interpreting the concepts of rules, and analyzing the objectives are the stages through which of inferring development policies passes. Elaborating on the development policies requires the aggregation and analysis of the rules of Islamic law. In order to solve the problem of harmony and authority of Martyr Sadr's discovery method, one can, instead of referring to rules directly use legislative texts as a source for inferring development policies. Thus, the authenticity of the discovered rules is affirmed by the undifferentiated successive hadith transmission.

Key words: Development, Development policies, Martyr Sadr, Economic doctrines, Methodology of Islamic economics.

JEL: B41, P4.

Presenting an Economic Pattern for the Analysis of International Bargaining by an Islamic Country Based on Game Theory

Iman Bastanifar / Assistant Professor of Economic Department, Isfahan University              

Received: 2015-09-23 - Accepted: 2016-02-24           bastanifar_iman@yahoo.com


Bargaining is a situation in which each person or side is capable of achieving a unilateral benefit in accepting or rejecting an agreement with the other. On one hand, negotiation experiences with 5+1 and continuing bargaining with these countries or other countries in the future, and on the other hand, policies of Moqavemah economics especially in the field of monetary financial requires the identification of suitable model for bargaining in order to protect national interests and proposing strategies for policy-making in the economy. Based on the research hypothesis, the strength of the domestic economy increases the bargaining power universally. This paper seeks to analyze the bargaining from the viewpoint of the principles of Islamic economics in the form of conventional jurisprudence, on one hand, and governmental jurisprudence influenced by the view point of the Supreme leader, on the other hand, in relation with the roles of foreign diplomacy and Moqavemah economic policies in the monetary financial field. This analysis has been done on the base of game theory and Nash asymmetrical bargaining equilibrium, Baranovichi and Gump (2013) pattern and Moqavemah economics policies. The findings show that an increase in the value of domestic assets contributes to an increase in the benefits of all sides of negotiation as well the benefits of the Islamic Republic of Iran due to the emphasis on domestic economic environment and Moqavemah economics policies in the monetary and financial sectors.

Keywords: Bargaining, Nash asymmetrical equilibrium, Governmental jurisprudence, Moqavemah economics, The supreme leader.

JEL: E40, F51.