Examining the Sufficiency of Zakāt and Khums (the Fifth) to Provide Needy Families with Minimal Livelihood in Iran’s Economy from 1380 to 1387

Mohammad Mahdi  ‘Askari* /  ‘Abdolmohammad Kashian**

According to clear terms of Qoranic verses and traditions, Khums (the Fifth) and Zakāt are assigned mostly to eliminate poverty and provide needy families with minimal livelihood. According to traditions, the amount of assigned Zakāt suffices to eliminate poverty; otherwise, God would increase its amount. Regarding current suspicions about the deficiency of the amount of potential Zakāt and its inefficiency to eliminate poverty, the question arises whether Shi'ite jurists’ fatwa (religious decree), which makes Zakāt exclusive to nine categories, is compatible with the basic philosophy of Zakāt assignment? Present inquiry calculates potential capacity of Zakāt, fetrieh (alms given on the fast-breaking festival at the end of Ramadan), and the  Khums in Iran’s economy, using statistical analysis and investigating the hypothesis of “efficiency of Zakāt  given that they are exclusive to nine categories. Having defined minimal livelihood according to Islam, necessary sources to eliminate poverty from Iran’s society are assessed. The results of the research show that revenues due to Khums and Zakāt are so much that suffice to eliminate poverty from society. Furthermore, these results show that Shiite jurists’ fatwa, which make Zakāt exclusive to nine categories, does not conflict with basic philosophy of Zakāt assignment.

Key Words: Zakāt, Khums, Elimination of poverty, Economy of Iran, Minimal livelihood.

Jel Classification: H27.

 

 

Liquidity Management in Islamic Banking

Seyyed ‘Abbas Moosavian*, Mojtaba Kavand**

Nowadays banks, as the largest financial intermediaries, have a crucial role in providing enterprises with the funds which they need. To perform their role better, these financial institutions face with serious challenges in liquidity management. Because many means of liquidity management are usurious, Islamic banks are challenged more seriously than conventional banks, and are seeking alternative methods and techniques.

Muslim thinkers have, for some time, recognized the problem and tried to design means which are compatible with basic fundamentals of Islamic jurisprudence, and efficient in liquidity management. Present paper, using a descriptive method, seeks to find answers to the following questions: what are the techniques to manage liquidity in Islamic banking? Can we provide a package of means compatible with needs categorization to manage liquidity in Islamic banking compatible with needs categorization? This inquiry not only introduces some new means to manage liquidity, but also provides a package of means compatible with categorization of liquidity needs in Islamic banking. 

Key Words: liquidity Management, Parallel Murabahah (Mark up), mutual interest-free loan, ABC Islamic Fund, Islamic Interbank Market, Islamic Securities.

JEL Classification: G0, G21.

 

 

A Prelude to the Nature, Domain,
and Prospects of the Philosophy of Islamic Economics

Mohammad Javad Tavakkoli*

Development of critical studies on the philosophy of economics in recent decades has confronted the scholars of Islamic economics with a serious question about the role of philosophical studies in giving identity to the science of Islamic economics and its promotion. Present research, using a philosophical analysis method, investigates the nature, domain, and prospects of the philosophy of Islamic economics in comparison with the philosophy of conventional economics. According to the main hypothesis of the research, these two fields of study can help promote the science of economics through interaction and dealing with epistemological, ontological, anthropological, and axiological aspects of economic propositions. The formation of studies on the philosophy of Islamic economics, which is distinct from its conventional counterpart in terms of philosophical approach and the object of second-order study, i.e. economics, has two groups of benefits: internal and external. This approach helps reconstruct economic reality in theories of economics through developing resources, means, and subject of knowledge acquisition, and promoting transcendental value system. Among the internal advantages of studies on the philosophy of Islamic economics are increasing economists’ self- consciousness about the nature and capacity of theories of Islamic economics, finding the missing links between fundamentals, theorization and application in works on Islamic economics, giving identity to the science of Islamic economics, and correcting the path.

Key Words:  Philosophy as a Second-order Discipline, Philosophy of Economics, Philosophy of Islamic Economics, Epistemology, Ontology, Axiology.

JEL Classification: B5, B41.

 

 

Features of Islamic Market in Theory and Practice

Seyyed Mohammad Kazem Rajaii*

The analysis of the features of Islamic market is one of the important subjects in Islamic economics, which has been hardly dealt with. Present research investigates the features of Islamic market in theory and practice, using a descriptive – analytical method. The main hypothesis of the research is that Islamic market can be recognized with such features as transparency, conformity with religious law, domination of Islamic ethics, direction and regulation of state, and that some manifestations of the realization of these features can be observed in the civilizational background of Islamic market. Transparency in Islamic market is affected by physical environment of Islamic market which strengthens Allah’s remembrance and fear of Doomsday, on the one hand. On the other hand, it results from strong divine motives to avoid being secretive about data. Price reduction, facilitating the exchanges, increasing the welfare of consumers, manufacturer’s added value, and finally increase in market efficiency, are among the outcomes of this strong transparency. In addition to state official regulation, the presence of seminaries and mosques in markets, which are formed in Islamic civilization, and their effective relationships with these markets have had a great impact on the observance of the prescriptions of divine law and Islamic morals in the market. Through inspiring the spirit of piety in the market, these Islamic institutions will cause the elimination of the bases of financial corruption, and emergence of the moral outcomes of seeking lawful morsel.

Key Words: Market, Features of Market, Market in Islamic civilization, Transparency, State Intervention.

JEL Classification: D41, D80.

 

 

Interest Risk Analysis in Comparison with a Profit and Loss Sharing Financial System

Majid Sameti*, Noorollah Salehi Asfiji**, Mostafa Salehi Asfiji***

In addition to such variables as the level of income and its time- span, the revenue risk of financial institutions has an important role in their success and efficiency. The present paper, focusing on aforementioned element, investigates the distinction between interest-based financial institutions and participatory financial institutions in view of their revenue risk. The research hypothesis is that investor’s risk in interest loaning system is more than his/her risk in a profit and loss sharing system. To test this hypothesis, investors’ risk in participatory institutions and interest-based institutions has been analyzed, using simple variance method and Johnson’s inequation method and corollaries of Rothschild-Stieglitz model. The results show that investor’s risk in interest loaning system is more than his/her risk in a system based on participation in benefit and loss. More risk in interest loaning system means less stability, more distance form justice, less growth, and as a result, less efficiency and welfare.

Key Words:  Interest, Profit and Loss Sharing, Efficiency, Funds Transfer Activity Risk.

JEL Classification: G21, E58.

 

 

The Philosophy of Islamic Economics: its Aspects of Significance, Ways of Formation, Mission, and Oncoming Issues

Vahid Moghaddam*

Discussion about the significance of “Islamic economics” and its nature has turned into one of the basic concerns of Muslim thinkers for more than three decades. This discussion is under the influence of different viewpoints about the way of interaction between Islam and modernity. Application of each viewpoint to economics leads to a certain kind of interaction between Islamic thought and economics. The main hypothesis of this paper is that Islamic economics being in its pre-science phase and lack of consensus on its conceptual and affirmative fundamentals and methodology necessitates the formation of Islamic economics within the theory of Islamic civilizationalism. The research method is analytical. The results show that developing the philosophy of Islamic science and applying it to economics is superior to islamization of the philosophy of Islamic science and direct and indirect methods of creating the science of Islamic economics. Hence, the mission of the philosophy of Islamic economics is to provide the fundamentals of Islamic economics and forming its methodology, using Islamic philosophy in its different domains. Issues such as the way of interaction between school, system and the science of Islamic economics, theorization method and evaluating the theories, evaluating modern economic institutions, causality, socialism or individualism, and philosophy of history are the main issues of the philosophy of Islamic economics.

Key Words: Confrontation between Islamic Thought and Modernity, Islamic Economics, Philosophy of Islamic Economics, Islamization of Knowledge, Philosophy of Traditional Economics.

JEL Classification: B41, Z12, Z19.

 

 

Analysis of Techniques to Prevent Bank Run

Rahim Dalali Esfahani*, Mohammad Va’ez Barzani**, Bayan Vali***

Bank runs can be considered as one of the bad effects of financial crises, which is very important to confront. Present paper investigates the ways to confront runs on banks. Meanwhile it provides an analysis about the financial crisis in 2008. Using approaches provided in Diamond & Dybvig paper (1983), a model is provided to analyze means and policies applicable to manage assets and liabilities, and to reduce the bad effects of runs on banks. The research method is analytical. The research investigates specifically three methods: “contract of lags in deposit withdrawal”, deposits insurance” and “central bank loaning”. The results show that liquidity crises and bank runs cannot be prevented by using these methods; rather these methods can only delay these crises, or in case of confrontation with these crises can reduce the intensity of damages. The model provided in this paper can be a basis for the development of complementary researches about the bank run problem in interest-free banking system in this transition period and the existing banking system of Islamic Republic of Iran.

Key Words: Bank Runs, Financial Crisis, Current deposit, Contract of Lags in deposit Withdrawal, Deposit insurance, liquidity.

JEL Classification: E52, G62, G63, E58.

 

 

* . Associate Professor in  Imam Sadeq ( p.b.u.h ) University (m.askari@isu.ac.ir)

** . PhD Student of Economics, Imam Sadeq ( p.b.u.h )University (kashian@isu.ac.ir)

Received: 27/10/2010 - Accepted: 01/03/2011

* . Associate professor of Islamic Thought and Culture Research Institute, (samosavian@yahoo.com)

** . MA Student of Financial Management, Imam Sadeq ( p.b.u.h ) University(mojtaba.isu@gmail.com)

Received: 16/11/2010 - Accepted: 24/02/2011

* . Member of Academic Staff in Imam Khomeini Education and Research Institute

mj_tavakoli2@yahoo.com

Received: 26/09/2010 - Accepted: 01/02/2011

* . Assistant Professor of Imam Khomeini Educational and Research Institute smk_rajaee@yahoo.co.uk

Received: 12/09/2010 - Accepted: 24/12/2010

* . Associate Professor, University of Isfahan  sameti.majid.ui@gmail.com

** . PhD  Student of Economics, University of Isfahan salehinor@yahoo.com

*** . BA Student of Economics, Payam-e-noor University of  Kerman mostafa@yahoo.com

Received: 11/10/2010 - Accepted: 12/02/2011

* . Assistant Professor, Payam-e-noor University of Fars province vahid_moghaddam@yahoo.com

Received: 19/11/2010 - Accepted: 15/02/2011

* . Associate professor, Isfahan University Rateofinterest@yahoo.com

** . Assistant professor, Isfahan University Mo.vaez1340@gmail.com

*** . MA Student of Economic Development and Planning Valibayan@yahoo.com

Received: 16/12/2010 - Accepted: 0103/2011

 

 

Table of Contents

1 . Examining the Sufficiency of Zakāt and Khums (the Fifth) to Provide Needy Families with Minimal Livelihood in Iran’s Economy from 1380 to 1387 / Mohammad Mahdi  Askari / Abdolmohammad Kashian

2. Liquidity Management in Islamic Banking / Seyyed Abbas Moosavian / Mojtaba Kavand

3. A Prelude to the Nature, Domain, and Prospects of the Philosophy of Islamic Economics / Mohammad Javad Tavakkoli

4. Features of Islamic Market in Theory and Practice / Seyyed Mohammad Kazem Rajaii

5. Interest Risk Analysis in Comparison with a Profit and Loss Sharing Financial System / Majid Sameti / Noorollah Salehi Asfiji / Mostafa Salehi Asfiji

6. The Philosophy of Islamic Economics: its Aspects of Significance, Ways of Formation, Mission, and Oncoming Issues / Vahid Moghaddam

7. Analysis of Techniques to Prevent Bank Run / Rahim Dalali Esfahani /  Mohammad Va’ez Barzani

 

 

 

In the Name of Allah

Ma'rifat-i Eghtesadi Vol.1, No.3

An Academi Semianual Journal on Islamic Economics Fall & Winter 2010-11

 

Proprietor: Imam Khomeini Educational and Research Institute

Editior in Chief: Mohammad Javad Tavakoli

Editor: Hasan Agha-Nazari

Executive Manager: Ghasem Askari

Translation of Abstracts: Language Department of IKI.

 

 

Editorial Board:

Hamid Abrishami: Professor, Tehran University

Parviz Davodi: Professor, Shahid Beheshti University

Gholam Reza Mesbahi Moghadam: Assistant Professor Imam Sadeq University

Farhad Rahbar: Associate Professor, Tehran University

 Masoud Derakhshan: Associate Professor Alameh TabaTabaii University

Hasan Sobhani: Associate Professor, Tehran University

Hasan Agha-Nazari: Associate Professor, Hawzeh and University Research Center

Elyas Naderan: Associate Professor,Tehran University

 

 

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