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Muhamed Zulkhibri
Turkhan Ali Abdul Manap
Aishath Muneeza Editors
Islamic Monetary
Economics and
Institutions
Theory and Practice
Islamic Monetary Economics and Institutions
Muhamed Zulkhibri • Turkhan Ali Abdul Manap
Aishath Muneeza
Editors
Islamic Monetary Economics

and Institutions
Theory and Practice
Editors
Muhamed Zulkhibri Turkhan Ali Abdul Manap
Islamic Development Bank Islamic Development Bank
Islamic Research and Training Institute Islamic Research and Training Institute
Jeddah, Saudi Arabia Jeddah, Saudi Arabia
Aishath Muneeza
Maldives Centre for Islamic Finance
Haveeree Hingu, Maldives
ISBN 978-3-030-24004-2 ISBN 978-3-030-24005-9 (eBook)

https://doi.org/10.1007/978-3-030-24005-9
© Islamic Research and Training Institute 2019

This work is subject to copyright. All rights are reserved by the Publisher, whether the whole or part of
the material is concerned, specifically the rights of translation, reprinting, reuse of illustrations, recitation,
broadcasting, reproduction on microfilms or in any other physical way, and transmission or information
storage and retrieval, electronic adaptation, computer software, or by similar or dissimilar methodology
now known or hereafter developed.
The use of general descriptive names, registered names, trademarks, service marks, etc. in this publication
does not imply, even in the absence of a specific statement, that such names are exempt from the relevant
protective laws and regulations and therefore free for general use.
The publisher, the authors, and the editors are safe to assume that the advice and information in this book
are believed to be true and accurate at the date of publication. Neither the publisher nor the authors or the
editors give a warranty, express or implied, with respect to the material contained herein or for any errors
or omissions that may have been made. The publisher remains neutral with regard to jurisdictional claims
in published maps and institutional affiliations.
This Springer imprint is published by the registered company Springer Nature Switzerland AG
The registered company address is: Gewerbestrasse 11, 6330 Cham, Switzerland
Foreword
In conventional monetary economics, monetary policy is often associated with the

main function of the central bank. The central bank controls supply of money and
monitors inflations through changes in interest rates, i.e., policy rates using mone-
tary policy instruments such as open market operations, reserve requirement, and
others. On the other hand, from an Islamic economics perspective, the monetary
policy should be based on the real sectors (productive sector of the economy) with
a minimum role of money and money market to perform economic exchanges and
generate economic activities. Thus, the central bank in the Islamic monetary system
should have determined the policy rate based on actual market transactions.
However, contemporary Islamic monetary system, if there are any, is heavily influ-
enced by conventional economic thoughts. This phenomenon has motivated Islamic
economists to develop a comprehensive theoretical framework of Islamic monetary
economics for the economic system.
On this occasion, this book addresses some of the critical issues such as the
interest-free economy, financial system, and monetary policy framework from
Islamic perspectives and discusses practical experiences of countries practicing
both conventional and Islamic banking system. This book aims to answer questions
related to the theoretical, empirical, and practical issues related to Islamic financial
systems such as macroprudential policy and regulation by taking stock of recent
academic and policy research on the topic. The major portion of this book is the
outcome of the IRTI-MCIF Research Workshop on “Islamic Monetary Economics
and Institutions: Theory and Practice” on November 2017, which was jointly orga-
nized by the Islamic Research and Training Institute, Islamic Development Bank,
and Maldives Centre for Islamic Finance in Maldives.
I believe that money and monetary institutions could play an extremely impor-
tant role in transforming an economy in ways good and bad. Hence, the discussion
provided in this book is of great importance for policymakers, academics, and prac-
titioners alike. In this respect, I would like to express my appreciation to authors
who have penned down their thoughts which are scholarly well-grounded. The
authors also provide important insights to readers around the world to undertake
further research on Islamic monetary economics. I would like to take this opportunity
v
vi Foreword
to congratulate the editors for their tremendous efforts to publish this important
book. Finally, I would also like to extend my deepest gratitude to those who have
provided important contributions and rendered their support for making this publi-
cation a reality.
Islamic Research and Training Institute, Sami Ibrahim Al-Suwailem

Islamic Development Bank,
Jeddah, Saudi Arabia
February 2019
Preface
Monetary economics has relatively more subtleties than other fields in economics,
because monetary theory has been developed much later than the theory of value.
The latter has acquired its neoclassical structure in a world of barter. Keynes’ (1930,
1936) attempted revolution against neoclassical economics was frustrated by the
fact that his ideas have falsely likened by Hicks (1937) as truly neoclassical ideas,
taking the form of the IS-LM model. This has been admitted by Hicks himself
(Hicks 1980), but the admission was generally ignored by mainstream economists.
Keynes protested that the theory of value was devoid of money and expressed his
strong objection to Says or Walras law. But the neoclassics have succeeded to drown
his ideas first under their forced but false interpretation of his theory as an IS-LM
model and later under the sad misrepresentation of Phillips curve as a tradeoff
between inflation and unemployment and making it a part of Keynes’ ideas. This
way, the neoclassics succeeded in replacing their counterrevolution with the revolu-
tion of Keynes.
Similarly, Islamic monetary economics, like conventional monetary economics
itself, whether according to the perspective of Keynes or the neoclassical perspec-
tives under Lucas (2004) microfoundations or Friedman’s (1969) monetarism, has a
significant share of subtleties. Islamic monetary economics in particular brings
forth numerous intellectual issues that require close scrutiny. Early writers in
Islamic economics, because they were not specialists, were unaware of such subtle-
ties. Similarly, those who focus on Islamic jurisprudence, or fiqh, and historical
analysis do not reach deep enough into economic analysis. One of the ignored sub-
tleties of Islamic economics is that it stands in the same line of revolution against
neoclassical economics with Keynes. However, it does not accept Keynes’ institu-
tional structure of a market economy.
The prohibition of interest-based loan contract and its replacement with a multi-
tude of finance contracts varying from partnership in product, partnership in profit,
investment agency, and sale finance have confronted Islamic economics with numer-
ous challenges. The first and utmost is the challenge of providing a monetary and
financial structure that is capable of issuing and allocating money to different uses
without relying on the classical loan contract and carrying out monetary policy
vii
viii Preface
without anchorage to the rate of interest. This has been done a long time ago
(Al-Jarhi 1981, 1983). Al-Jarhi’s model ignores the neoclassical fixation with
microfoundations. It introduces an institutional structure that replaces interest-
based finance and encompasses money creation and allocation and monetary and
fiscal policies.
Money is issued in the form of central bank investment deposits (investment
accounts) or central deposits (CDs) placed with banks on the basis of PLS. Banks
here use a multitude of Islamic finance contracts. They are similar to universal bank-
ing in their ability to take equity in the firms they finance, while providing other
types of financing without the use of the classical loan contract. In addition, and as
a part of their financing modes, they trade in commodities, which they ultimately
offer for sale to their customers seeking finance. Such banks have the advantage of
mixing and matching between contracts to avoid information asymmetry and the
related risks of adverse selection and moral hazard. This stands in contrast with
commercial banks which have to cope with the weaknesses of the classical loan
contract. Islamic banks are therefore similar in their use of such strategy to universal
banks which use a combination of equity and loan finance to reduce information
asymmetry.
The return on CDs flows back to the central bank as seigniorage and ends in the
government budget. The government has to finance its non-income-earning activi-
ties through taxation. For income-earning activities, it must stand in line with the
private sector to apply to banks for finance. In addition, a great deal of public ser-
vices, like education and health care, would be provided through awqaf (private
trusts or endowments). The government must therefore encourage the establishment
of awqaf as a way to reduce the tax burden. In addition, a redistribution levy or
zakah is collected by government and non-government organizations and used to
finance microprojects whose titles are transferred to some of the poor each year as
a way of self-employment.
Al-Jarhi’s model replaces fractional reserves with total reserves, because the for-
mer redistributes wealth in favor of bank shareholders against the public. In addi-
tion, the money multiplier, which is the basis for fractional reserves, assumes that
banks need excess reserves before they can make loans. At first primary deposits are
made, creating excess reserves, which allow loans to be made, leading to the cre-
ation of derivative deposits. Each new loan uses up a part of excess reserves. Money
creation by banks stops when excess reserves have fallen to zero. In reality, Holmes
(1969) and Keen (2011) claimed a completely different process that runs in the
opposite direction. Banks provide loans first, which produces derivative deposits. If
banks ended with insufficient reserves, they would have a two-week period in which
to get more reserves from the central bank. The central bank has to provide those
reserves, unless it is willing to cause a bottleneck for production and commerce.
Empirical research initiated by Moore (2001) and later independently by several,
including Kydland and Prescott (1990), confirmed this operational aspect of central
banking, as observed early by the then senior vice-president of the New York
Federal Reserve, Alan Holmes. Another disadvantage of fractional reserves is that it
Preface ix
weakens central bank control over the money supply; besides, as a tool of monetary
policy, it leads to instability. Naturally, when Al-Jarhi built his model in 1981, he
abandoned the idea of fractional reserves.
In Al-Jarhi’s model, the central bank in an Islamic monetary system issues cen-
tral deposit certificates (CDCs), as a negotiable money-market instrument available
to banks and the public. It is traded in an open market. Its proceeds supplement
CDs. Meanwhile, CDCs are equity-based certificates, whose holders effectively
own a proportional common share of the income-earning assets created by banks on
the asset side of their balance sheets. They are placed by the central bank in all
banks in the economy, based on its own criteria, that give efficiency the highest
priority. The rate of return on CDCs is the average rate of return on the most diversi-
fied (least risky) PLS investment portfolio in the economy. It therefore represents
the average profitability on assets in the economy. At the same time, it represents the
rate of growth of the economy.
The central bank anchors monetary policy to its rate of return (RCDC). In con-
trast to the rate of interest, it is market determined and not just an administered
price. The anchorage of monetary policy to the RCDC and the use of issuing more
CDs and trading CDCs in the open market in order to fine-tune monetary growth
would be the alternative policy tools in an Islamic monetary system. In such an
economy, it would be easy for the central bank to achieve a degree of price stability
that cannot be reached in a conventional economy, due to anchoring the policy to a
good market measure of the rate of growth of the economy. Needless to say,
Al-Jarhi’s structure excludes the possibility of risk and debt trading, which are the
operational tools through which speculation is carried out in financial markets.1 This
also eliminates the Ponzi scheme that is used to lend money to finance speculation
(Keen 2011). In addition, Al-Jarhi’s model assumes away the use of ruses to mimic
conventional finance, as it is now common in the contemporary Islamic finance
industry (Al-Jarhi 2016). Ruses are eliminated directly by central bank regulations
and their effective enforcement.
Al-Jarhi’s contribution has been ignored by some, as it has been published in the
early 1980s with minimum exposure. However, it remains a viable alternative to the
Friedman rule for bringing the nominal rate of interest to zero, while keeping the
conventional institutional setup. The latter has been implicitly presumed by several
Islamic economists, which rendered their analysis beyond logical and practical jus-
tifications. A particular example is the Chapra-Mirakhor pure profit-and-loss-
sharing or PLS model2 (Chapra 1996; Mirakhor and Zaidi 2007).
Monetary management according to this school would be conducted in a con-
ventional fashion, while paying attention to the control of government deficits as
well as banks borrowing from the central bank. Usually, conventional monetary
policy tools are listed as Islamic tools, after excluding the discount rate, by keep-
ing the required reserve ratio, which has been repeatedly discredited, as well as
1
Obviously, risk and debt trading are prohibited by Islam.
2
This school should also include many others, like M. N. Siddiqui, Khurshid Ahmad, Muhammad
Uzair, and many others.
x Preface
interest-free loans. Such loans would not be strictly interest-free unless the central
bank implements a policy of absolute price stability. Naturally, this cannot be done
without the institutional arrangement that generates the RCDC which is equal to
the rate of economic growth. The pure PLS model takes for granted the way money
supply is determined in the conventional system with the recognition that the gov-
ernment’s and banks’ appetite to borrow must be curtailed. Somehow, the average
profit rate for the whole economy becomes common knowledge, is used as an
anchor to monetary policy, and serves a benchmark for investment.
The failure of the Friedman rule to gain wide acceptance among intellectuals and
policymakers is a good indicator that the problem of interest cannot be surmounted
without an institutional change. The pure PLS model provides some of this but not
enough to shake the system, except through switching completely to profit sharing,
which is usually presented without spelling out specific institutional changes in the
monetary and financial sector.
Al-Jarhi (1981) has a ready-made formula for rebuilding the blocks of an Islamic
monetary and financial sector. However, the formula insists on continuing to pro-
vide finance through both partnership in profit and product and debt creating sale
finance. Still this approach leaves the application of an acceptable formula for divid-
ing finance between partnership and debt-creating means, to the monetary
authority.
One of the variants of the pure PLS models is presented in this book by M. Fahim
Khan. Like the neoclassics, Khan treats money as a medium of exchange without
spelling out the underlying raison d’être of money. This does not appear at the out-
set as much of a problem. However, it may just happen that an explicit treatment of
why money is being held in the model may provide a wider perspective of economic
analysis. The explicit treatment of the raison d’être of money exposes some of the
disadvantages of conventional finance (Al-Jarhi 2017b). Meanwhile, Khan’s model
stands out as an explicit formulation of his perception, within the pure PLS approach.
The model as expected from this approach narrows down monetary policy to set-
ting the proper supply of money by the monetary authority under the rule of total
reserves. The application of this rule has been rather cryptic in many writings.
Al-Jarhi (1981, 1983) is more explicit about its rationale and mechanism. The appli-
cation of total reserves needs more details regarding the types of deposits taken by
banks in an Islamic monetary system and how they would be treated singly or across
the board. However, the central bank application of total reserves, which would be
unprecedented, would provide sufficient practical information to guide such details.
Ankara Social Sciences University Mabid Ali Al-Jarhi

Ankara, Turkey
Preface xi
References
Al-Jarhi, M. (1981). Towards an islamic monetary and financial system: Structure and implemen-
tation, The Arabic Publications Series (5). Jeddah: King Abdulaziz University.
Al-Jarhi, M. (1983). A monetary and financial structure for an interest-free monetary economy:
Institutions, mechanism and policy. In Z. Ahmad, M. Iqbal and M.F. Khan, (Eds.), Money
and banking in Islam. Islamabad: Center for Research in Islamic Economics, Jeddah, and the
Institute of Policy Studies.
Al-Jarhi, M. (2016). An economic theory of Islamic finance regulation. Islamic Economic Studies.
24(2), 1–44.
Al-Jarhi, M. (2017b). Inefficiencies in search models: the case for Islamic finance. MPRA Paper
No. 82064.
Chapra, M. U. (1996). Monetary management in an Islamic economy, Islamic Economic Studies.
4(1), 1–35.
Friedman, M. (1969). The optimum quantity of money. In The optimum quantity of money and
other essays. Chicago: Macmillan.
Hicks, J. R. (1937). Mr. Keynes and the “Classics”: A suggested interpretation. Econometrica.
5(2), 147–159.
Hicks, J. R. (1980). IS–LM: An explanation. Journal of Post Keynesian Economics. 3(2), 139–154.
Holmes, A. R. (1969). Operational constraints on the stabilization of money supply growth. In
F. E. Morris (Ed.), Controlling monetary aggregates (pp. 65–77). Boston: Federal Reserve
Bank of Boston.
Keen, S. (2011). Debunking economics: The Naked Emperor Dethroned. London: Zed Books.
Keynes, J. M. (1930). Treatise on money. London: Macmillan.
Keynes, J. M. (1936). The general theory of employment, interest and money. London: Macmillan.
Kydland, F. E. & Prescott, E. C. (1990). Business cycles: Real facts and a monetary myth. Federal
Reserve Bank of Minneapolis Quarterly Review, 14(2), 3–18.
Lucas, R. E. (2004). Keynote address to the 2003 HOPE Conference: My Keynesian education.
History of Political Economy, 36(S1), 12–24.
Mirakhor, A. & Zaidi, I. (2007). Profit-and-loss sharing contracts in Islamic finance. Ch. 4,
Handbook of Islamic Banking (pp. 49–63). Cheltenham: Edward Elgar Publishing.
Moore, B. J. (2001). Some reflections on endogenous money. In L.-P. Rochon and M. Vernengo
(Eds.), Credit, interest rates and the open economy: Essays on horizontalism (pp. 11–30).
Cheltenham: Edward Elgar.
Contents
1 Introduction�� 1
Muhamed Zulkhibri and Turkhan Ali Abdul Manap
Part I Theoretical Foundation of Monetary Policy from Islamic

Perspectives
2 Monetary Economics and Macroeconomic Model
for an Islamic Economy�� 11
M. Fahim Khan
3 Islamic Monetary Economics: Insights from the Literature �� 39
Md. Akther Uddin
4 On Normative and Logical Foundations of Monetary Policy�� 55
Atiq-ur-Rehman
5 Historical and Ideological Peculiarity of the Monetary
Institutions: Islamic and Austrian School’s Perspectives �� 65
Omar Javaid
Part II Monetary Policy, Policy Instruments and Financial Stability

in Islamic Economy
6 Islamic Finance and Participatory Financing Constraints
in Pakistan�� 89
Azam Ali, Tanveer Kishwar, and Muhamed Zulkhibri
7 Pricing Deposit Insurance Premium in Islamic Banks�� 109
Ibrahim A. Onour
8 Rate of Profit as a Monetary Policy Tool for Financial Stability�� 117
Trisiladi Supriyanto
xiii
xiv Contents
9 Stress Testing and Reverse Stress Testing: An Approach

for a Resilient Islamic Financial Industry �� 137
Samir Alamad
10 Liquidity Risk Management in Islamic Banks: Evidences
from Malaysia�� 159
Muhammed Habib Dolgun and Adam Ng
11 Fintech-Enabled Islamic Financial System
and Financial Stability�� 181
Etsuaki Yoshida
Glossary of Arabic Terms�� 193
Index�� 199
About the Guest Editor
Mabid Ali Al-Jarhi is a Professor of Economics and Finance, ASBU, and

Coordinator of the project of establishing the International Center for Islamic
Economics and Finance, ASBU-ICIEF. He has also held the posts of Professor of
Economics and Finance at INCEIF; Professor of Economics and Finance at Hamad
Bin Khalifa University, Qatar; President of the International Association for Islamic
Economics; and Member and Secretary of Shari’ah Board, Dubai Financial Market.
He has taught economics at American and Egyptian universities and participated
in establishing several Islamic banks and in introducing Islamic banking laws. He
also has publications in economics and Islamic economics and is the former author
of a yearly economic report on Islamic finance in the UAE and the Gulf. He holds
an M.A. in economics from the University of Illinois and UCLA and a Ph.D. in
economics from USC.
xv
About the Editors
Muhamed Zulkhibri is a Senior Economist at the Islamic Research and Training

Institute, Islamic Development Bank (IRTI-IsDB), Saudi Arabia. Prior to joining
the IRTI-IsDB, he worked at the Central Bank of Malaysia and policy research
institutions in various capacities. Previously, he lectured at the Universiti Putra
Malaysia, Malaysia, and University of Nottingham, United Kingdom. His current
research focuses on monetary economics, macroeconomics and economic develop-
ment, and Islamic banking and finance. He published extensively in various publi-
cations in leading academic journals, industry reports, books, and the financial
press. He is the co-editor of the Islamic Economic Studies journal. He earned a
Ph.D. in economics from the University of Nottingham, United Kingdom.
Turkhan Ali Abdul Manap is a Senior Research Economist at the Islamic

Research and Training Institute, Islamic Development Bank (IRTI-IsDB), Saudi
Arabia. Prior to joining IRTI-IsDB, he was an Associate Professor of Economics in
the Faculty of Economics and Management Sciences, International Islamic
University Malaysia (IIUM), where he taught various courses for bachelor, master,
and Ph.D. level. His research interests include macroeconomics, (Islamic) capital
market, financial stability, and stress testing for Islamic financial institutions. He has
spoken and attended various national and international conferences on economics
and finance issues, while his research papers have appeared in numerous academic
journals. He obtained his Ph.D. in economics from IIUM.
Aishath Muneeza of INCEIF is one of the key founders of Islamic finance in

Maldives. She is the first female Deputy Minister of Ministry of Islamic Affairs
and the first chairperson of the Hajj Pilgrimage Fund of Maldives. She was also
the former Deputy Minister of Ministry of Finance and Treasury of Republic of
Maldives. Currently, she is the chairperson of Maldives Centre for Islamic Finance.
She has published books and numerous articles on Islamic finance, and her
research areas include legal studies & corporate governance applicable to Islamic
finance. She structured the first corporate sukuk, sovereign private sukuk, and
Islamic Treasury instruments for the government of Maldives, and she has played
xvii
xviii About the Editors
the key role in offering Islamic finance products by more than 11 i nstitutions. She
also designed the first Islamic microfinance scheme offered in Maldives. She sits
in Shariah advisory committees of financial institutions offering Islamic financial
services such as Islamic hire purchase and takaful. She also holds the position of
chairperson of three different in-house Shariah committees. She is the chairperson
of Shariah Advisory Council of CMDA, the capital market regulatory authority
of Maldives since 2011. She is the only registered Shariah Adviser for structuring
capital market instruments in Maldives and she is a registered Shariah Advisor at
the Securities Commission of Malaysia. The Islamic capital Market framework of
Maldives was designed by her. She has won numerous national and international
awards for her service in Islamic finance industry including the Rehendhi award,
the highest award conferred to women by the government of Maldives. She is also
a role model and a mentor for females who aspire to build their careers in Islamic
finance industry and is the Vice President of Women on Boards, an NGO advocating
women representation on boards of companies. She is an invited speaker in Islamic
finance conferences and events held in different parts of the world. She is listed
in 2017 as number 7 among the 50 Influential Women in Business and Finance
by ISFIRE, which is an official publication of Islamic Bankers Association based
in London, and she is among the most influential 500 in Islamic Economy. She
is a member of the Association of Shariah Advisors in Islamic Finance Malaysia
(ASAS), Malaysia. She obtained her Phd from the International University of
Malaysia in law.
Contributors
Guest Editor
Mabid Ali Al-Jarhi Ankara Social Sciences University, Ankara, Turkey
Editors
Turkhan Ali Abdul Manap Islamic Research and Training Institute, Islamic
Development Bank, Jeddah, Saudi Arabia
Aishath Muneeza Maldives Center for Islamic Finance, Male, Maldives
Muhamed Zulkhibri Islamic Research and Training Institute, Islamic
Development Bank, Jeddah, Saudi Arabia
Contributors
Samir Alamad Aston University, Birmingham, Aston, UK

Azam Ali State Bank of Pakistan, Karachi, Pakistan
Atiq-ur-Rehman Department of Econometrics and Statistics, Pakistan Institute of
Development Economics, QAU Campus, Islamabad, Pakistan
Muhammed Habib Dolgun INCEIF, Selangor, Malaysia, and Central Bank of the
Republic of Turkey, Ankara, Turkey
Omar Javaid Institute of Business Management, Karachi, Pakistan
M. Fahim Khan Islamic Centre for Research in Islamic Economics, Minhaj
University, Lahore, Pakistan
xix
xx Contributors
Tanveer Kishwar Jinnah University for Women, Karachi, Pakistan

Adam Ng Research Management Centre, INCEIF, Petaling Jaya, Selangor,
Malaysia
Ibrahim A. Onour School of Management Studies, University of Khartoum,
Khartoum, Sudan
Trisiladi Supriyanto Ibnu Khaldun University Bogor, Bogor, Indonesia
Md. Akther Uddin School of Business, University of Creative Technology,
Chittagong, Bangladesh
Etsuaki Yoshida Kyoto University, Kyoto, Japan
List of Figures
Fig. 2.1 Equilibrium in money market.

(Source: author’s own illustration)�� 29
Fig. 3.1 Evolution of money over time (Source: Chapra 1996)�� 41
Fig. 3.2 Islamic monetary instruments (Source: author’s own
illustration)�� 48
Fig. 6.1 Financing mix for Pakistan Islamic Banking Industry
2014–2015. (Source: State Bank of Pakistan)�� 94
Fig. 6.2 Different modes of financing 2013–2015.
(Source: State Bank of Pakistan)�� 95
Fig. 6.3 Total financing of Islamic banking institutions (December 2015,
million Rupees). (Source: State Bank of Pakistan)�� 96
Fig. 8.1 The framework of rate of profit as Shari’ah reference rate.
(Source: Author’s own illustration)�� 119
Fig. 8.2 Ideal Shari’ah compliance repo transaction mechanism
for Maqasid al-Shari’ah. (Source: Author’s own illustration)�� 121
Fig. 8.3 Shari’ah open market operation through SBIS auction and
government Sukuk repo. (Source: Author’s own illustration)�� 126
Fig. 8.4 The relation between the Shari’ah open market operation and
the rate of profit. (Source: Ismail 2010)�� 128
Fig. 8.5 Recommended Shari’ah open market operation using
Islamic reference rate. (Source: Author’s own illustration)�� 131
Fig. 8.6 Illustration of SIMA transaction in Islamic secondary
interbank money market. (Source: Author’s own illustration)�� 132
Fig. 9.1 Liquidity risk stress testing framework
Fig. 9.2 (a) Regular and (b) reverse stress tests
Fig. 10.1 Impulse response results. (Source: Author’s own calculation)�� 176
xxi
xxii List of Figures
Fig. 11.1 Crowdfunding Mechanism. (Source: author’s own illustration)�� 185

Fig. 11.2 Investment Account Platform. (Source: Investment
Account Platform)�� 186
Fig. 11.3 Ratio of the Banked Population (%).
(Source: Demirguc-Kunt et al. 2015)�� 187
Fig. 11.4 Structure of Waqf World. (Source: Waqf World)�� 187
Fig. 11.5 Zakat System with “Usage-Choice” Option.
Fig. 11.6 Share of Islamic Banking. (Source: IFSB 2017)�� 190
List of Tables
Table 2.1 Unemployment rates in major Muslim countries

in current decade�� 23
Table 5.1 The socioeconomic and political context of commercial
banking system�� 70
Table 6.1 Islamic finance segments by regions (US$ billion, 2015)�� 92
Table 6.2 Musharakah financing offering by the Islamic
banking institutions�� 97
Table 7.1 Deposit insurance premium�� 112
Table 7.2 Deposit insurance premium policy�� 113
Table 7.3 Deposit insurance and credit risk�� 114
Table 8.1 The government repo transaction volume and frequency�� 123
Table 9.1 Stress testing scenarios�� 150
Table 9.2 Stress testing factors�� 152
Table 10.1 List of variables�� 170
Table 10.2 Summary of descriptive statistics�� 170
Table 10.3 Correlation coefficients�� 171
Table 10.4 ARDL cointegration tests (Malaysian Islamic Banks)�� 172
Table 10.5 Long-run coefficients�� 173
Table 10.6 VECM-based Granger results (Malaysian Islamic banks)�� 175
Table 11.1 Chronological development of major Islamic financial
products�� 183
xxiii
Chapter 1
Introduction
Muhamed Zulkhibri and Turkhan Ali Abdul Manap
1.1 Overview
This book provides original works and provoking ideas covering the theoretical
and empirical issues related to monetary economics and policy in an Islamic
financial system. It highlights several options for authorities and regulatory bod-
ies regarding monetary policy, regulation and instruments for Islamic financial
institutions. This book also discusses Islamic monetary policy effects on economic
growth, financial stability and resilience to shocks in practice. In a nutshell, this
book addresses some critical issues such as the interest-free economy and finan-
cial system, monetary policy framework from Islamic perspectives, and country-
specific experiences with Islamic monetary policy in a dual banking system. The
book is organized into two parts: (i) theoretical foundation of monetary policy
from Islamic perspectives and and (ii) monetary policy, policy instruments, and
financial stability in Islamic economy.
In Part 1 of this book, M. Fahim Khan in Chap. 2 discusses a macroeconomic
model that reflects economic features of an Islamic economy, implied in the Islamic
system of property rights (elaborated in the literature on Fiqh-al-Mal) and in the
Islamic system of exchange (elaborated in the literature on Fiqh-al-Buyu’). In Chap.
3, Md. Akther Uddin analyzes the re-emergence of Islamic economics and finance,
especially Islamic banking in the middle of the last century, which has motivated
economists to develop a comprehensive theoretical framework of modern Islamic
banking. Chap. 4 by Atiq-ur-Rehman summarizes a number of logical flaws and
socioeconomic consequences of the monetary policy, which shows that interest-
based monetary policy would be harmful to the society. Chap. 5 by Omar Javaid
uses the work of Greif (1994), Hollingsworth (2000), and Schumpeter (2006) to
M. Zulkhibri (*) · T. A. A. Manap

Islamic Research and Training Institute, Islamic Development Bank, Jeddah, Saudi Arabia
e-mail: turkhanali@isdb.org
© Islamic Research and Training Institute 2019 1

M. Zulkhibri et al. (eds.), Islamic Monetary Economics and Institutions,
https://doi.org/10.1007/978-3-030-24005-9_1
2 M. Zulkhibri and T. A. A. Manap
develop a criterion to understand the mainstream monetary framework of modern

western economics as explained by the Austrian school of economic thought, which
is then compared with the Islamic monetary perspective.
In Part 2, Azam Ali, Muhamed Zulkhibri, and Tanveer Kishwar in Chap. 6 exam-
ines the earlier efforts to revive and promote risk-sharing modes of financing
(Musharakah and Mudarabah) with respect to the current international and local
practices of Islamic banking industry. Chapter 7 by Ibrahim Onour determines the
cost of deposit insurance premiums in a number of Islamic banks operating in GCC,
Malaysia, and Bangladesh and assesses the relevance of insurance policy in each
country with regard to risk-based versus flat-rate premium policy. Chapter 8 by
Trisiladi Supriyanto provides a fundamental research to find a replacement of the
Central Bank of Indonesia (BI) policy rate as a reference rate for the Islamic finan-
cial transactions. Chapter 9 by Samir Alamad provides an analysis of the real prac-
tices of stress testing as a risk management tool within an Islamic financial market
that exists in a highly sophisticated and regulated financial center. Finally, Chap. 10
by Muhammed Habib Dolgun and Adam Ng examines the short-term and long-term
determinants of Islamic banks’ liquidity holdings. This chapter also provides the
empirical analysis of liquidity risk management of Islamic banks in Malaysia.
Finally, in Chap. 11, Etsuaki Yoshida discusses recent trends of Islamic Fintech
and sheds light on its potential effects on the stability of a financial system specifi-
cally in a dual banking system. The study argues that Fintech can provide practical
solutions to criticisms relating to Islamic financial products, by focusing on the aspect
of its networking capability. Given the rapid pace of development in this sector, the
study argues that Islamic Fintech will contribute to mitigating financial instability,
by promoting financial inclusion and involving the more diversified flow of funds.
1.2 heoretical Foundation of Monetary Policy from Islamic

T
Perspectives
In conventional monetary economics, monetary policy is often associated with the

main function of the central bank. The central bank controls the supply of money
and inflation through changes in interest rates, i.e., policy rates using monetary pol-
icy instruments such as open market operations, reserve requirement, and others.
Although economists do not agree about how monetary policy affects the economy,
under the most basic framework, the central bank is able to change the magnitude
of the money supply. Monetary policy actions are usually done through open-market
operations, in which short-term government debt is exchanged with the private sec-
tor. This policy-induced movement in the monetary base is to have any impact
beyond their immediate effects on the central bank’s balance sheet in a way that
leaves the real value of the monetary base unchanged. Hence other agents must lack
the ability to offset them by changing the quantity or composition of their own lia-
bilities. The central bank will be able to modify the quantity of money in circulation
only if it is able to influence the demand for money.
1 Introduction 3
According to the theory of money demand, demand for money consists of three
factors: (1) transaction demand, (2) precautionary demand, and (3) speculative
demand. Increases in interest rate lead to an increase in the opportunity cost of
money and in turn people prefer to hold less money. A shift in policy leads to a
change in the money supply that, for a given money demand, leads to a change in
money-market interest rates. This resulted in a negative relationship between the
interest rate and the speculative demand for money. Furthermore, the demand for
money is not only dependent on the interest rate. However, factors such as expecta-
tion of future inflation, income, and wealth in the economy, i.e., investment, have
a large effect on demand for money. Consequently, in practice, monetary authori-
ties should have precise information to be able to formulate appropriate monetary
policy decisions.
In Islam, economic activities are carried out with the prescription of Shari’ah,
i.e., the Islamic law, which is based on the Quran and the Hadith. In Islamic eco-
nomics, the interest rate should not have any role in the economy. The general prin-
ciples of Islamic finance could be summarized, but not limited, to the following:
prohibition of interest, thus encouraging the profit and loss sharing mechanism;
prohibition of contractual uncertainty; and prohibition of gambling, speculation, or
excessive risk-taking in carrying out transactions, which makes the instruments and
mechanism of monetary policy different from conventional economics. As argued
by Chapra (1996), the absence of interest rate in Islamic economics and the exis-
tence of some institutions like Zakat minimize the speculative demand for money
and make total demand for money in Islamic economics more stable. In this way,
the demand for money in Islamic economics consists of only transaction demand
and precautionary demand.
In the early era of Islamic economics, the functions of the monetary system
were assigned to Bayt al-Mal, which has similar duties as the central bank today
with government fiscal policy added. Bayt al-Mal was considered the central
finance house for the Islamic empire, with many branches in all Islamic countries.
Its main functions were issuing currency and maintaining the stability of its value.
To conduct this function, Bayt al-Mal was established and formed with three dif-
ferent institutions (Mannan 1986): (1) Bayt al-Mal al-Khaṣ, (2) Bayt al-Mal, and
(3) Bayt al-Mal al-Muslimin. Bayt al-Mal al-Khas is a treasury of a country that
has a special function in managing government funds, such as the private expense
of the caliphate, and some other special expenses. Since money at that period is
composed of silver and gold coins (Dirham and Dinar), while fiat money and credit
were not applicable, monetary expansion mechanism did not actually exist as it is
in recent times.
As illustrated in this book, in the early Islamic state, there was no basis for
changes in the money supply through discretionary measure as there was no bank-
ing system and commodity money was extensively used instead. Moreover, credit
had no role to play in creating money because (i) credit was used only among few
traders and (ii) the rules governing the use of promissory notes and negotiable
instruments were in such a way that the credit was not capable of creating money
(As-Sadr 1989). The above rules affected the equilibrium between the goods market
and the money market based on cash transactions. Instead, he argues that profit-
sharing ratio, refinance ratio, public share of demand deposits, value-oriented allo-
cation of credit, and qard al-hasan ratio were distinctive Islamic monetary policy
instruments.
The central bank in the Islamic monetary system can determine the profit rate
based on actual market transactions as proposed in this book by Fahim Khan. The
central bank can apply these rates as a policy tool on its own analysis of the eco-
nomic conditions prevailing in the real sector and the macroeconomic objectives to
be achieved in the economy. He further argues that the strategy to move gradually
toward 100% reserve requirement and slowly reducing debt contents in the invest-
ments in the economy deserves immediate attention from the policy makers in
Muslim countries that intend to transform their financial and monetary system to
conform to Shari’ah. Hence, it is important for the monetary authority and the
Shari’ah authority to jointly analyze the costs and benefits of monetary policy
objectives and tools before a policy is implemented.
1.3 onetary Policy, Policy Instruments, and Financial

M
Stability in Islamic Economy
Contemporary Islamic monetary system is heavily influenced by conventional eco-

nomic thoughts. In the real-world practice, only one of the components of the
Islamic monetary system, the prohibition of riba, has been attempted through the
limited use of Islamic finance products/contracts. A full-fledged Islamic banking
system has yet to be implemented. The prevailing system is still dominated by the
conventional model, which is the use of fiat money and fractional reserve banking
system. Under this system, interest rates play an important role as an instrument and
transmission process of monetary policy to ensure price and financial stability. The
monetary authority also uses monetary policy in the form of monetary control to
achieve the targeted rates of inflation.
Due to several logical flaws in the contemporary monetary policy, the policy may
actually lead to the opposite of its desired goals, as indicated by the existence of a
cost channel of the monetary transmission mechanism. It is suggested that the mon-
etary authorities should broaden the spectrum of research and should abandon the
blind faith in the so-called demand channel of the monetary transmission mecha-
nism. Tight monetary policy that is exercised by increasing interest rates by many
authors is shown to have negative implications for the employment and equity. In
other words, lowering the interest rate can possibly enhance the employment and
equity. In addition, a number of economies such as the USA and Japan have interest
rate virtually close to zero. This could indicate that zero interest regimes are not
necessarily an obstacle for higher growth and better employment. This provides
support to Islamic economists who argue that a better economic system would be
interest-free.
1 Introduction 5
In the theory of Islamic economics, monetary policy is based on the real sectors
(productive sector of the economy) with the minimum role of money and money
market to perform economic exchanges and generate economic activities. Monetary
policy in Islam does not only influence the money supply but also support the
growth of the real sectors. In an Islamic economic setup, the dichotomy between the
monetary sector and the real sector is absent as the monetary sector is always associ-
ated with the real sectors. Islamic economy requires the direct linking of financing
with the underlying asset so that any financing activity is clearly and closely identi-
fied with the real economy (Iqbal and Mirakhor 2007). Hence, the prohibition of
interest and the implementation of Islamic finance contracts, which are embedded
in the Islamic economic system, connect these two sectors. Many scholars believe
that Islamic finance is more stable in both long- and short-term, as opposed to the
conventional interest-based system, which is very sensitive to any changes in inter-
est rate. Moreover, to conduct Islamic monetary policy, innovative Shari’ah compli-
ant financial instruments and products are inevitable.
In this context, it is suggested that the central bank’s credit facilities, as lender of
last resort, are important for the development of the Islamic money market. In cer-
tain countries, the credit facility is provided in the form of Commodity Murabahah
arrangement or temporary accommodation of money on a free-of-charge basis. In
others, central banks may provide credit with returns tied to Mudarabah deposit
rates of banks receiving credit or may provide liquidity through buyback arrange-
ments for specified Sukuk held by the banks. Shari’ah-compliant alternatives to
repo, based on Sukuk, which can be priced in relation to market returns at an appro-
priate level, could be considered. Central banks in all jurisdictions impose reserve
requirements on the deposit liabilities of the banks. Additionally, the central bank
can offer Wadiah certificates as evidence of deposits placed with it, with returns tied
to the average of the return on interbank Mudarabah investments.
On the other hand, this book argues that the use of participatory or profit loss
sharing instruments like Mudarabah and Musharakah has been substantially absent,
particularly on the asset side of the bank’s balance sheet. When some Islamic banks
execute Musharakah financings, it lacks true risk sharing as the return on
Musharakah financing is based on the conventional pricing benchmark. These prac-
tices have attracted criticism on the current model of Islamic banking. Hence, efforts
should be made to evolve participatory financing modes. For instance, in the case of
Pakistan, the Steering Committee established by the Government of Pakistan has
promoted the use of these instruments (Mudarabah and Musharakah) for Islamic
banking. Moreover, all reports of high-level commissions and committees have rec-
ommended that participatory financing like Musharakah and Mudarabah is the
spirit of Islamic finance and therefore may be promoted.
Liquidity risk is one of the important issues that need attention in terms of resil-
ience of the Islamic banking sector. While there are several studies on the perfor-
mance, growth, and efficiency of Islamic banks, empirical studies from the
regulatory and supervisory perspectives are limited. In this line of research, this
book contributes to the debate by providing a more recent evidence on Malaysian
Islamic banks’ liquidity risk management perspectives. Their assessment shows that
total assets, deposits, inflation, government bonds, capital adequacy, and interbank
interest rate show positive significant relations with liquidity. On the other hand, the
CDS rate of the country, statutory reserves, and Sukuk stocks show negative rela-
tions with the liquidity. The essence of the study indicates that market liquidity
influences banks’ liquidity, and banks’ liquidity responds to the profitability of
Islamic banks. Hence, by designing mitigating mechanisms both at the macro-level
and micro-level is essential for the safety and profitability of Islamic banks.
A wave of development in information and communication technology (ICT)
has completely reached the huge continent of the financial industry, and financial
services highly enhanced by ICT are recently called Financial Technology or
“Fintech.” Fintech has been reshaping the financial services industry with the level
and speed of innovation. In recent years, Islamic finance has also enjoyed the benefit
of this growing Fintech. Originally, money is a conceptual existence, and theoreti-
cally, notes and coins contain no value by themselves under the current fiat money
standard. As a result, financial services are well-harmonized with ICT that deals
with data processing and can expect infinite varieties of forms of financial services
even in the near future.
This book illustrates recent trends of Islamic Fintech and sheds light on its poten-
tial effects on the stability of a financial system. While growth of Islamic finance
was evident not just in its market volume but in product development as well, the
industry has often been criticized by academic scholars that the current practice of
Islamic finance is not in the direction of pursuing its objectives, or Maqasid al-
Shari’ah. Fintech can provide practical solutions to these criticisms, by focusing on
the aspect of its networking capability. As a conclusion, increasing application of
Fintech in Islamic financial system will contribute to mitigating financial instability,
by promoting financial inclusion and involving the more diversified flow of funds.
1.4 Conclusion
The lack of understanding and confusion about Islamic economics in general,

Islamic monetary economy in particular, can be attributed to the virtual absence of
formal descriptions of the theory underlying the proposed system. It should be clear
that “loan” and “equity” are not only of two different legal natures but also very
different in economic consequences.1 The monetary authority should gradually shift
its mind-set from conventional monetary operation to dual monetary operation as a
first step to approach an Islamic monetary system. However, under the current envi-
ronment, optimum dual monetary policy can be achieved by adopting rate of profit
as a benchmark policy rate, so that the goal of distributive social well-being and
equity as well as minimizing inefficiency can be realized.
1
In mainstream economic textbooks, money and capital markets are treated as loan and separated
from one another by the length of the loan period.
1 Introduction 7
The use of Shari’ah reference rate as a substitute for monetary policy rate and as
a monetary operation tool is very important in determining the rate of profit for
Islamic financial transactions. Theoretically, Islamic financial institutions should
calculate the level of the profit and loss sharing itself based on the financing and
market profit and company operational incomes. As proposed in this book, rate of
profit should be used as a monetary policy tool to promote economic growth, and
Islamic financial institutions should not benchmark their rate of return or margin to
the market interest rate. Islamic financial institutions should establish their own
market rate of return or margin based on the actual return in the real sector. In other
words, Islamic financial institutions should gradually shift from interest rate bench-
marking to profit and loss sharing return benchmarking.
Contemporary Islamic economic and financial systems have been developed
under the dominance of capitalistic conventional economic and financial systems.
The domination of capitalism has a significant impact on the development of the
Islamic financial system. A full-fledged Islamic financial system is yet to be estab-
lished to implement its operations purely and wholly (kaffah) according to Islamic
law. In addition, many Muslim economists still believe that capitalist economic sys-
tem is better than Islamic economic system, due to the fact that many developed and
developing countries including some Muslim countries have improved their eco-
nomic well-being under the conventional economic system. There is a long way to
go to implement the Islamic financial system with many constraints and limitations.
References
As-Sadr, K. (1989). Money and monetary policies in early Islamic period. In B. Al-Hasani &
A. Mirakhor (Eds.), Easy on Iqtishad: The Islamic approach to economic problems (pp. 199–
217). Silver Spring: Nur Corp.
Chapra, M. U. (1996). Monetary management in an Islamic economic. Islamic Economic Studies,
4(1), 14–15.
Greif, A. (1994). Cultural beliefs and the organization of society: A historical and theoretical reflec-
tion on collectivist and individualist societies. Journal of Political Economy, 102(5), 912–950.
Hollingsworth, J. R. (2000). Doing institutional analysis: Implications for the study of innovations.
Review of International Political Economy, 7(4), 595–644.
Iqbal, Z., & Mirakhor, A. (2007). An introduction to Islamic finance. Singapore: John Wiley &
Sons (Asia).
Mannan, M. A. (1986). Islamic economics, theory and practice. Hodder and Stoughton: Cambridge.
Schumpeter, J. A. (2006). History of Economic Analysis (reprint). London: Routledge.
Part I
Theoretical Foundation of Monetary Policy
from Islamic Perspectives
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she is not shut up like an Arab woman.
Whilst the man journeys afar with the caravans, or on freebooting
expeditions, she remains at home to direct affairs. But this is not all,
for she studies old traditions, is highly enlightened, and far in
advance of the men in knowledge of old customs and manners, and
also of the art of reading and writing the Tuareg language. In short, it
is she who preserves their traditions and is acquainted with their
literature, and indeed sometimes ranks as the highest authority of
the tribe.
Duveyrier relates that amongst the eastern Tuareg the women
take part in the councils when the tribes assemble, just as did the
Iberian women in ancient days.
In the battlefield it is often dread of the women’s scorn which
drives the men to make the utmost efforts to return victorious.
“This trait reminds one of the Iberian maidens, who chose their
husbands from amongst the bravest warriors.”
Descent on the mother’s side alone ennobles, and the children
belong to the family of the wife.
For instance, the son of a nobly born woman and a slave is
acknowledged as free born, whereas the son of a slave and a free
man remains a slave. But, in favour of the latter, certain tribes have
created a particular caste called “Iradjenat,” who, though yet slaves,
are exempt from certain heavy labour.
It must be added that the women have entire control over their
own property.
Inheritance in the tribes goes from a man to his brother, and, in
default, to the son of a sister, but never to the direct progeny.
In such communities misconduct on the part of women is not
tolerated, it is simply punished with death. Captain Bissuel relates
that a native of the province of Setif killed his sister by order of his
father, they having learnt that she was leading a dissolute life. Both
father and brother mourned for the poor culprit, but were convinced
that they had only done their duty.
On the other hand, according to Duveyrier, the Tuareg lawfully
claim le droit du seigneur from their female slaves, before these
marry.
The same custom is mentioned by Herodotus as obtaining
amongst the Adyrmachidæ in the neighbourhood of Egypt.
The western Tuareg regard this custom as despicable.
The Tuareg have to give their wives a dowry, which varies in
amount. The western Tuareg, for instance, give at least six camels, a
negress, and a complete costume.
These are the principal features of Tuareg customs. They have
many points in common with those of the mystical Amazons and the
Iberians of antiquity.
Even now among the Basques the man plays a subordinate part.
The woman rules and controls the house. “The husband is her head
servant,” who brings to the house only himself and his labour,
together with a stipulation for progeny.
The Arabs.
The Arabs in Tunisia are, like those in Algeria, nearly all nomads.
They reside chiefly in the southern and central portions of the
Regency.
They are recognisable by their tall, slender figures, their lean,
muscular build, and by their dignified nobility of carriage.
The Arab cast of countenance is narrow, the nose curved, the lips
thin and graced by a delicate black beard, the black eyes are lively,
but the expression crafty.
The Arab woman is endowed with a pretty, well-formed figure, but
she is of small stature. She is, on the whole, attractive, but fades
early, being old and ugly through hard work by the time she attains
her twentieth year. Unlike the Berber woman, she is usually obliged
to go abroad veiled.
As the Bey was too weak to collect his own taxes, he united the
various groups of nomad Arabs to form his auxiliary troops. These
tribes were thence designated “Mahzen,” were almost exempt from
taxation, or only paid in kind, such as oil, dates, etc. In return they
bound themselves to fight the robber bands (Jish) who frequently
harassed the country. Were they victorious, all spoils were theirs.
Their ostensible duty was to assist the Bey’s own soldiers to recover
the taxes. This collection resolved itself into sheer plunder. The least
of their perquisites was the right to “diffa” and “alfa,” which means
hospitality for themselves and their horses; of this they took
advantage to the greatest extent, often pillaging wherever they
appeared.
For instance, the holy city of Kairwan was often compelled to raise
forced contributions under this pretext.
Their morals, as a rule, are very lax. The abduction of married
women and girls is common, and adultery a matter of course.
The upbringing that an Arab woman receives in a tent is not
exactly calculated to ensure in any way a moral tone. A young girl is
from the very outset of her innocent life apt to see and learn much
that to us appears offensive.
Whereas the man has every possible right of control over his wife,
she has only the “justice of God” (el hak Allah), meaning that he
must fulfil his obligations towards her as her husband, failing which
she can demand a divorce, not an infrequent occurrence.
After the enactment of the law emancipating slaves, the men in
some tribes married their negresses, with a view to thus evading the
law. But it befell that the former went into court and complained that
they were defrauded of their rights as wives.
Although the Arabs, as aliens, have always been in a minority in
the land of the Berbers, yet they were the masters until the arrival of
the French. They had steadily spread themselves over all the open
plains and lower tablelands, moving ever from east to west. Thus
each tribe continually changed its territory, one tribe ever pressing
another before it farther westward.
Long before Mohammed’s day this immigration had already
begun, but it was not until after his time that it made any real
headway, and the conquest of the country and its conversion to
Mohammedanism took place.
Not until much later, in the middle of the eleventh century, was the
great migration accomplished, in which both Mongols and Egyptians
were included. Such great waves, however, always cause a counter
wave. When the tribes reached the shores of the Atlantic on the
most distant coasts of Morocco, the tide turned. Thus the tribe that
claims to be the chief of all the tribes, namely, the Shorfa, or
“Followers of the Prophet,” is precisely that which, having been to
Morocco, returned eastwards.
Yet another receding wave brought back the “Arabs” who had
conquered Spain, and who were afterwards driven forth again.
These Spanish “Arabs” were for the most part Berbers who had
been carried westward by the tide, and who returned, after a long
sojourn on the Iberian peninsula, blended with other races—
Ligurians, Iberians, Celts, and Western Goths.
The greater proportion of these refugees, who are known in
Barbary as “Andaluz,” established themselves in the towns, where
they introduced a new strain into the already mixed race of Moors.
These Spanish Moors are more especially represented in Tunis.
It is quite natural that, in a country so often invaded and peopled
by foreigners who to this day have never really amalgamated, there
should be an entire lack of patriotism such as is found in Europe. It is
as Mussulmans that these races have united to make war against
the Christian. Amongst themselves they are often at enmity.
Mohammedanism.
Though it is an undoubted fact that the various races of Berbers
and Arabs have preserved much of their identity, it is also noticeable
that, to a stranger arriving in the country for the first time, the
inhabitants appear, as it were, to be fused into one race. This fusion
is the result of their creed, for Mohammedanism has been drawn like
a veil over the whole country.
Mohammed, through the Koran, gave to even daily labour the
stamp of religion, and in a marvellous way moulded all the various
races, who thus became “the faithful,” into one mode of thought and
life, which gradually shaped them all to one pattern, although
hereditary inclinations and customs contended, and are still
contending, against such constraint.
The features which appear most strongly marked in these various
races who have become Mussulmans, are their individual absorption
in their religion and their family organisation.
The stubborn influence of Islamism on the community is entirely
expressed in the phrase “Mektub” (it is written). Fatalism has
destroyed all initiative, all progress. How men may act is immaterial.
“It is written.”
To the Mussulmans, authority is of divine origin. Their creed
ordains that everyone must bow to authority. This has given rise to
the most complete absolutism, alike from the Bey, whose title is “The
chosen of God and the owner of the kingdom of Tunisia,” down to
the lowest of officials.
But yet the yoke may prove too heavy—then the oppressed revolt,
as has so often happened.
The influence of religion is manifest in the treatment of the insane,
whose utterances are held as sacred. The number of real and
pretended lunatics is consequently very great. Hospitality is not
exactly gladly offered to such afflicted persons, but they are
permitted to take whatever they please from a house, a liberty often
very widely interpreted. Latterly a madman in Tunis declared several
houses to be under a ban. All the inmates at once fled, and could not
be persuaded to return. This individual was also inspired with the
sublime idea of erecting a barricade in one of the most populous
streets, by means of doors which he lifted from their hinges.
The Prophet organised the family on the lines best adapted to the
nomad tribes, who were destined to be great conquerors. He
ordained the absorption of the vanquished into the family; while the
males were killed or, if fortunate, made slaves, the women were
allowed to enter the family.
This was the foundation of the rapid conquest of North Africa by
Islam.
To ensure unity in the family, composed of so many and varied
elements, the man is invested with the most absolute authority. He
does not marry but he buys his wife, who becomes his property. He
is unquestionably her lord and master, he can maltreat her, kill her if
she is untrue to him, without risking injury to a hair of his own head.
All that he owes her is the “hak Allah.”
Crimes against women are more rare now through fear of the
French; but as there is no legal census, many murders may be
committed which are never brought to light.
Religious influence first and foremost, also life in common under
equal conditions of many generations of different extraction, have
obliterated many of the characteristics of the natives of Tunisia.
Many Berber tribes have been entirely transformed into Arabs, and,
on the other hand, many Arab tribes have been Berberised. Indeed,
there are tribes forming a subdivision, of which it is well known some
are Berbers, some Arabs.
Of the religious brotherhoods, so numerous elsewhere under
Islam, there are comparatively few in Tunisia. We find the
“Tidyanya,” “Medaniya,” and the “Aissaua,” and, besides these,
many scattered “Shorfa.”
In the towns there is more fanaticism than in the country. In this
respect “those who can read and write are the worst.”
Yet many customs and reminiscences may be found of a former
age before Mohammedanism was forced on the Tunisians.
For instance, the people hang bits of rag all over sacred trees;
many fear the “evil eye,” or honour five as a peculiarly lucky number.
For this reason they set the mark of their own five fingers on their
houses to protect the latter. Indeed, it is not uncommon for a man
who has more than five children, if questioned as to their number, to
reply that he has five, rather than be obliged to name an unlucky
number.
If rain is long delayed, they take refuge in exorcism, and will on
occasion even dip their kaid in a fountain so that his beard may be
wetted—that surely brings rain.
The Moors.
Nowhere has all origin of race been so entirely effaced as in the
towns. There have sprung up the Moors—quite a new race of town
dwellers, which may be said to have absorbed all others.
Whereas the population of the interior of the country to a great
extent escaped intermixture with the new elements, up to the time of
the arrival of the Arabs, it has been quite otherwise in the towns,
where foreign traders settled and intermingled with the native
inhabitants.
Amongst the Moors in the towns are found, as has been said, the
so-called “Andaluz,” who were driven out of Spain. Several of these
distinguished families have carefully preserved the records of their
genealogy, and some of them still possess the keys of their houses
in Seville and Granada. They have certainly intermarried with other
families of different origin, but still cling to their traditions, and retain
and exercise to a certain extent the handicrafts and occupations of
their forefathers in Spain. The gardeners of “Teburka,” for instance,
are descendants of the gardeners of the Guadalquivir, and the
forefathers of the potters near Nebel were potters at Malaga.
The blood of slaves of all nationalities has also been introduced
into the people known as Moors.
The complexion of the Moor is fair, or, more rarely, olive; it
resembles that of the Southern Italian or Spaniard. The shape of the
head is oval the nose long, and they have thick eyebrows and very
black beards. Of medium height, they are well built, and their
carriage is easy and graceful. They are considered more honourable
than either Jews or Christians, and were noted formerly for their kind
treatment of their slaves. Though clever workmen and well educated,
their moral tone is not high. In old days the town of Tunis was the
great market frequented by the people of the Sudan; nothing was
considered worth having that had not been made by a Tunisian.
The Turkish element, as represented by the Bey and his
surroundings, has long since ceased to have any influence on the
Moorish race in Tunisia. No real Turks are now to be found in the
country. In the towns, however, are a few descendants of Turkish
soldiers and Tunisian women; they are called “Kurughis,” and are
lazy, vain, and ignorant, and consequently not much respected.
The Moors, or the town dwellers, on the whole, are, however, not
so vigorous and energetic as the nomads and the mountaineers;
their manners are more effeminate, and they are lazier.
Crimes against the person, such as assault or murder, are rare in
the towns, but drunkenness on the sly is common, and immorality is
prevalent.
The Jews.
The ancient conquerors of the country, the Carthaginians and
Romans, who covered it with towns, forts, and monuments, have left
no impress of themselves on the appearance of the present
inhabitants, nor do there survive amongst the tribes any traditions
concerning them.
No more remains to recall the Vandals and Goths, yet the latest
researches prove the existence in early days of other Semitic
peoples besides the Arab.
The earliest importation to the country of Semitic blood was
doubtless the Phœnician. To this is due the fact that many of the
types portrayed on Chaldaic and Assyrian ruins are now found
scattered throughout Tunisia.
At the same time as the Phœnicians may be mentioned the Jews,
the earliest of whom probably came to Barbary at the same time as
the former, but their number was largely added to later, after the
conquest of Jerusalem by Titus. Moreover, it is known that many
Berber tribes were converted to Judaism and remained Jews, even
after the Arab conquest. The classic type of European Jew is
therefore rarely met with in Tunisia.
After the Mohammedans the Jews are, numerically, most strongly
represented in Barbary. They form somewhat important
communities, not only in the town of Tunis, but also in all other
towns, even in the island of Jerba. Possibly with theirs has mingled
the blood of the ancient Carthaginians.
There are also a great number of Jews whose ancestors were
ejected from Spain and Portugal; these are called “Grana,” from their
former most important trading city in Spain.
These “Grana” were under the protection of the foreign consuls,
and therefore have had nothing to complain of; but the old Jews
were in a disastrous condition in former days, and suffered much, so
much that some isolated families abjured Judaism and became
Mohammedans; such they are still, but they always associate with
their former co-religionists. Other Jews—those of Jerba, for instance
—have modified their religious forms, pray to Mohammedan saints,
and hold their Marabouts in honour.
A peculiar head-dress distinguishes those Jews who are under no
protection, from those who are protected by the consuls. It is an
irony of fate that many Jews have placed themselves under Spanish
protection, because they knew that Spain was their home in old
days. Now they are protected by the country that formerly drove
them forth. Somewhat similar is the case of the Algerian Jews in
Tunis who seek French protection.
All the Jews of Tunis retain the ancient Spanish ritual. They are
peaceful and well behaved, and not so grasping as others of their
faith, but they are clever at taking advantage of a good opportunity
when there is a prospect of making money, or when their trade may
be extended. Commerce is therefore in great measure in their
hands.
In the whole Regency of Tunisia there are over fifty thousand
Jews, and their numbers increase rapidly. In the town of Tunis there
is a “ghetto,” the quarter formerly devoted to them, and where they
were compelled to dwell. It has long since become too small, and the
Jews have now spread over all the other quarters, and in the
bazaars have wrested from the Moors many of their shops.
This Jewish community is an interesting study, and one is
astonished to find how in many respects they so little resemble their
co-religionists in other countries.
COSTUMES
The Dress of the Countrywomen (Arabs—
Berbers)
Over the whole of Tunisia the countrywomen, whether Arab or

Berber, wear a similar costume, which must be almost identical with
that worn by the Grecian women in olden days.
The dress of the women of ancient Greece consisted of what was
known as the “peplos”[8] (πέπλος), a white wrapper gathered in by a
belt about the waist (ζώνη), and supported on the shoulders by pins
(περόναι and ἐνεται). As head-dress, or for ornament, they wore a
kind of forehead band (χρήδεμνον) or veil, and, in addition to these,
earrings, necklets, bracelets, etc. etc.
The “peplos” was a large piece of stuff without seam, which was
folded round the body from one side.
The dress of a Tunisian woman of to-day is the same. It consists
of a “m’lhalfa,” which resembles the “peplos,” being a long narrow
piece of stuff, wound round the body in such a manner that it entirely
covers the back and shoulders. One end is brought over the breast,
and hangs down in front; the other end covers the lower limbs, and
forms a skirt. The piece is so long that it hangs in folds, which partly
conceal the sides. Whilst the Greek “peplos” was held together by
“fibulæ” on the shoulders, the clasps that confine the “m’lhalfa” are
placed rather forward—over the breast. The Grecian woman’s neck
was bare, her chest covered. But it is the contrary with the Tunisian
woman. In other words, the “m’lhalfa” is merely a “peplos” which has
been drawn forward. Many Tunisian women draw the “m’lhalfa” over
the breast, and arrange one end to form a full drapery; others, as in
the Matmata villages, omit this, but wear over their bosom a thin
square of stuff called “katfia.” This is secured by the clasps already
mentioned.
In a few places, such as the Khrumir mountains, the “m’lhalfa” is
composed of two pieces of stuff worn one in front and one behind,
held together by the breast clasp. Over the neck and shoulders is
laid a rather large towel. The “m’lhalfa” is always bound in at the
waist by a long woollen belt, generally white or of some bright colour.
The clothes for daily wear are, as a rule, of a dark blue woollen
material, but for festivals or weddings they wear red, yellow, or parti-
coloured garments of silk, cotton, or wool.
In most regions a kerchief is worn on the head (tadchira); round
this is wound a turban (assaba), composed of a long piece of stuff
ornamented with coins or trinkets. Over this again is thrown a large,
often embroidered, cloth, in which the face is enveloped (begnuk).
Generally speaking, the Tunisian women wear no underclothing,
at all events not in daily life in the country. On festive occasions,
especially in the towns of the oases, they assume a white shirt
(suïera). It has very short or no sleeves. A bride, as a rule, wears
one. The bridal shirt (gomedj) is generally embroidered about the
opening at the neck in silk or cotton, in stripes of black, yellow, blue,
and red.
In daily life they do not wear shoes, but go barefoot. At the feasts
the women put on yellow shoes without heels (balgha).
The ornaments worn by the poor are mostly of brass, copper, or
horn; by those in better circumstances, of silver; or sometimes by the
rich, of gold.
Round the neck are worn strings of glass beads, and in the ears
large slight earrings (“khoras,” from cross); on the wrists, broad open
bracelets (addide). Finally, they wear large heavy anklets called
“kralkral,” that are generally made not to meet.
To fasten the “m’lhalfa” on the shoulders large brooches are
commonly employed. These are in the form of an open circle,
through which passes a pin (khlel).
On the breast they wear a silver chain (ghomra), from which
depend coins or flat plates of metal. These chains are fastened to
the breast-pins. All these ornaments are made by the Jews of the
towns or oases, and are really artistic productions.
The women do not usually wear straw hats, though some may
amongst the Berbers of the island of Jerba. These hats are precisely
similar to those depicted on some of the Tanagra figures found in
Greece.
In Jerba are worn crescent-shaped breast ornaments, said to
come from Tripoli; also ornaments in filagree work from Zarsis.
The women often carry a little looking-glass tied to their breast-
pins, and also the requisites for applying henna and kohol.
When they fetch water in their great pitchers they carry these
slung on their backs by means of a wide band round the forehead, or
in the end of their turban, loosened for the purpose.
Their hair is never plaited, but is covered by the cloth or turban. A
woman is rarely seen in stockings. In a few places where the roads
are bad they wear wooden shoes. The Khrumirs are proficient in
making these.
Much of the material employed in the women’s dress is woven or
made by themselves in the region in which it is worn, but some is
brought from Tripoli, the Sudan, or from Europe. As a rule, however,
the countrywomen wear only their own handiwork.
In the Matmata mountains and the neighbouring oases I was able
to collect and buy a complete costume, the whole of which had been
made in that region, and chiefly of native materials.
It must be mentioned that the Berber women have everywhere
more freedom than their Arab sisters, and are therefore often
unveiled. Yet many of the tribes have gradually adopted Arab
customs, and in this particular follow their example—at all events in
the vicinity of a town, for in the country the women all go unveiled,
only hiding their faces on occasion.
We will now examine the dress of the men, both Arabs and
Berbers.
In contradistinction to the Kabail of Algeria, the Arabs always
cover their heads. In Tunis, where the races are so mixed, nearly all
the men go covered. They wear white cotton caps under the red
“shashia,” allowing a narrow edge of white to appear beneath the
latter.
The Arabs always wear a haik or burnous; the Berbers, generally.
The burnous, as is known, consists of a cape united at the breast.
The “haik” is a piece of thinner stuff, which is worn as a drapery,
usually under the burnous, but also alone.
In the southern mountains of Tunisia I found that many of the
mountaineers wore, instead of burnous or haik, a piece of stuff
without hood or seam. In this they draped themselves so that the
head was covered. It was usually of brown or grey wool. The
burnous is as a rule white, as is also the haik. Many of the poorer
folk, especially amongst the Berbers, wear nothing else in daily life;
but they assume a shirt, waistcoat, and coat, as also a gala burnous
(sjebba) on festive occasions. This last is shorter than the real
burnous, and is made with short wide sleeves, of bright coloured
stuff, often embroidered in silk.
The people on the coast near Susa and to the south have a still
shorter brown-hooded garment in place of a haik or burnous, and
they wear trousers. This costume is convenient for fishermen.
A large broad-brimmed straw hat is worn by the denizens of the
plains. Shoes or sandals of morocco leather or hide are worn by
many.
Red morocco leather boots, worn inside a shoe, are used by
riders, also spurs.
The purse is a long, narrow, knitted or woven bag.
The Berber often wears a shirt, and, in such cases, only a haik
over it, and no burnous.
The usual costume of the Arab is that worn in Algeria—the
burnous and the haik, the latter bound on with a camel’s-hair cord;
shoes (or boots). Of the Berber, shirt, haik, burnous, bare legs, and
uncovered head.
Such variations of these costumes as may exist in Tunisia have
been brought about by an altered mode of life and the admixture of
races.
Dr. Bertholon declares that most of the costumes are of very
ancient origin. That of the Jews, for instance, he dates back to the
days of the Carthaginians; the burnous, he says, resembles the
hooded Roman cloak.
The Moorish woman’s dress is very pretty, but extremely
coquettish. It is overladen with ornaments.
“In the morning she wears a very scanty costume. If one has the
luck to catch a glimpse of her at an early hour as she moves hither
and thither in the harem, she is not easily forgotten. She is clad in a
simple shirt, with short sleeves, which leave her plump arms
exposed. Under this she wears trousers, so short that they scarcely
reach the knees; a little shawl, of which the ends are knotted in front
at the waist, replaces a skirt, and enfolds her pretty form. Her
bosoms are supported by a narrow bodice, and about her hair is
bound a silk kerchief, but her locks fall down over her neck” (Des
Godins de Souhesnes).
When she leaves the house she wears a “gandura,” a kind of
cloak of transparent material, fastened on the shoulders by gold or
silver pins. Besides this she has put on wrinkled white linen trousers
reaching to her ankles; over her head she throws a white kerchief;
and, lastly, she conceals her face with a long embroidered veil.
The Moorish woman blackens her eyebrows, enhances the
beauty of her eyes with antimony (khol), and stains with orange-red
henna the nails of her fingers and toes and the palms of her hands.
The dress of the Moor much resembles that of the Jew. He wears
a tasselled cap (shashia), surrounded by a turban, and a silken vest
or coat, embroidered in gold or silver.
The trousers are very wide, and fall in heavy folds; the lower part
of the leg is uncovered, and on his bare feet he wears broad shoes
of red or yellow morocco leather (babush).
The costume of the Jews, as worn by them before they were free,
to distinguish them from the Arabs, is very picturesque, and,
fortunately, still universal.
The men, who are generally handsome, wear a tasselled shashia,
often surrounded by a turban. Their wide, pleated Turkish trousers
reach a little below the knee, and are secured at the waist by a belt.
They wear also coat and waistcoat, stockings, and shoes.
Many have now adopted European attire, but the characteristic
Jewish type is easily distinguished.
The Jewish women are not veiled. They wear shirts, narrow
embroidered silk trousers, cotton stockings, shoes, and on their
heads a pointed cap.
These women, when young, are very pretty, but also very
immoral. They are generally spoilt by being too stout, young girls
being fed up to make them attractive for their wedding.
There is no native industry peculiar to Tunisia, but there are a few
which may be considered worth notice.
The holy town of Kairwan is famed for its beautiful carpets. In
Gefsa and Jerba also curious and beautiful carpets are woven.
Clay ware is a speciality of Nebel, where, to this day, pottery is
made that recalls that found in the Phœnician and Roman tombs
near Carthage. Pottery is also made at Jerba in the form of jars,
vases, etc., which are sent to different parts of the country—northern
Tunisia obtaining its pottery from Nebel; southern, from Jerba.
Amongst the tribes, pottery is also made by the women and
negresses, but generally without the aid of the potter’s wheel. The
Khrumir in particular are noted for their peculiar ornamented pottery.
In the towns, moreover, and especially in Tunis, there are
numbers of shoemakers, leather workers, saddlers, harness and
pouch makers, etc. etc. There are also excellent dyers and makers
of perfumes.
In the oases are made fans, and baskets of palm leaves and of
alfa straw; baskets, hats, and great crates for corn, which take the
place in these regions of the clay jars of the Kabail.
Tripoli lies quite close to Tunis, and there manufactures attain a
high level; a great quantity therefore of stuffs—carpets and worked
leather articles—are imported thence. The Jews are the goldsmiths,
and, even in the interior and in the southern oases, possess the art
of making pretty bracelets and ornaments.
The inhabitants of Zarsis are renowned for their peculiar filigree
work.
POSTSCRIPT
The information adjoined regarding the number of souls included in

each of the Berber tribes, and of their domestic animals, came to
hand only after the first portion of my book had gone to press. I
therefore add it here. This information has been collected with great
pains throughout the Government of El Arad by the kindly help of M.
Destailleur, Contrôleur Civil to that Government. It is positively
reliable, the calculations which I was able to make in person during
my stay in several of the villages, with the same view, corresponding
exactly to those in the table. Only—as an outsider—I must aver that
the number of horses may not be quite correct, but for some places
appears computed too low. As for instance in Hadeij, where, it is
said, none are to be found, which was certainly not the case.
Possibly the explanation may be that the sheikhs feared that the
inquiry made by the Government arose from a desire to know how
many mounted men this tribe could place in the field in time of war.
Number of Sheep and
Names of Tribes and Villages. Asses. Oxen. Horses. Camels. Mules
Inhabitants. Goats.
Jara 1925 500 40 100 40 700 40
Menzel 2200 600 60 35 40 410 90
Shenini 1040 300 2 25 30 185 30
Ghenush 350 100 4 3 8 200 40
Bu Shma 50 20 10 30
Udref 750 280 70 8 120 450 2
Metuia 1800 200 20 10 100 600 60
Tebulbu 235 45 25 4 38 350 1
Zarat 165 45 55 3 12 1000
Ghraïra 450 100 8 390 1450
Alaia 232 30 20 351
Hazem 1229 210 4 36 240 2880
Hamernas 2100 600 57 37 300 2100 1
⎧ Gassur 900 140 70 20 50 350 10
⎪ Debdaba 1390 115 22 40 92 520 19
⎪ El Begla 1455 432 41 535 1830
Beni-Zider, ⎪ Shelahsha 1689 400 95 1400 10,000 4
South of ⎨
Matmata 1000 120 8 20 400 1800
the Shott. ⎪
⎪ Shehel 1100 150 25 1200 2500
⎪ El Heurja 1000 140 30 420 2000
⎩ Zauia 868 320 35 800 8000 4
Tujud 210 15 30 2 55 520
⎧
Zarua 604 55 27 1 207 713 2
⎪
⎪ Dehibat 100 20 3 2 50 1000
⎪ Ben Aissa 340 25 25 3 65 311
⎪ Guelaa Ben Aissa 495 40 45 3 115 410
Matmata
⎨ Smerten 105 10 1 25 265
Mountains.
⎪ Beni Sultan 632 43 73 1 55 200 2
⎪ Tujan 1071 51 80 3 169 1000 1
⎪ Uled-Sliman-Hadeij 1300 200 200 300 2700 8
⎪
Lasheish 1020 120 223 6 263 2036 2
⎩
Tamezred 1082 50 100 7 400 4600 4
Urghamma. ⎧ Neffat 3830 826 46 221 3371 9926 3
⎪ Accara 5496 750 250 110 1335 6060
⎪ Tuasin 2461 1203 15 600 6945 15,263
⎪ Khezur 3411 890 150 142 1353 9745
⎪
Ghomrasen 1376 565 3 43 684 2848
⎪
Shenini-Duirat 410 80 20 3 300 1960 1
⎪
⎪ Guermasa 460 80 30 8 170 1150
⎪ Uderma. ⎧ Hamidia 287 60 25 255 890
⎪ ⎨ Uled-Debab 389 150 20 200 2000
⎨ ⎩
⎨ of Tribes and
⎩ Villages. Number of Sheep and
Names Asses. Oxen. Horses. Camels. Mules
⎪ Inhabitants. Goats.
⎪ Deghagha 585 250 10 34 300 300
⎪ Uled Shada 330 125 42 320 1200
⎪ Suabria-Duirat 153 7 2 2 32 800
⎪ Beni Barka 125 25 7 2 60 240
⎪ Zedra 117 25 12 1 14 360
⎪ Gatufa 130 30 15 4 11 400
⎪
⎧ Uled-Lazareg
⎪
Jelidat ⎨ Uled-Aun 302 100 4 50 300 1100
⎩
⎩ Uled-Ashiri
Quadid 125 30 4 4 80 600
Duiri 1357 63 54 10 280 3400

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Islamic Monetary Economics and

Institutions Theory and Practice

Macroprudential Regulation and Policy for the Islamic

Environmental Law and Economics Theory and Practice 1

Economics of Monetary Union 12th Edition Paul De Grauwe

Ethics Economics and Social Institutions 1st Edition

The Governance of Telecom Markets: Economics, Law and

Financial Reporting for Islamic Financial Institutions

Islamic Banks and Financial Institutions: A Study of

The Economic System of the Early Islamic Period:

Islamic Monetary Economics

ISBN 978-3-030-24004-2 ISBN 978-3-030-24005-9 (eBook)

© Islamic Research and Training Institute 2019

In conventional monetary economics, monetary policy is often associated with the

Islamic Research and Training Institute, Sami Ibrahim Al-Suwailem

Ankara Social Sciences University Mabid Ali Al-Jarhi

Part I Theoretical Foundation of Monetary Policy from Islamic

Part II Monetary Policy, Policy Instruments and Financial Stability

9 Stress Testing and Reverse Stress Testing: An Approach

Glossary of Arabic Terms�������������������������������������������������������������������������������� 193

Mabid Ali Al-Jarhi is a Professor of Economics and Finance, ASBU, and

Muhamed Zulkhibri is a Senior Economist at the Islamic Research and Training

Turkhan Ali Abdul Manap is a Senior Research Economist at the Islamic

Aishath Muneeza of INCEIF is one of the key founders of Islamic finance in

Mabid Ali Al-Jarhi Ankara Social Sciences University, Ankara, Turkey

Samir Alamad Aston University, Birmingham, Aston, UK

Tanveer Kishwar Jinnah University for Women, Karachi, Pakistan

Fig. 2.1 Equilibrium in money market.

Fig. 11.1 Crowdfunding Mechanism. (Source: author’s own illustration)������� 185

Table 2.1 Unemployment rates in major Muslim countries

Muhamed Zulkhibri and Turkhan Ali Abdul Manap

M. Zulkhibri (*) · T. A. A. Manap

© Islamic Research and Training Institute 2019 1

develop a criterion to understand the mainstream monetary framework of modern

1.2  heoretical Foundation of Monetary Policy from Islamic

In conventional monetary economics, monetary policy is often associated with the

1.3  onetary Policy, Policy Instruments, and Financial

Contemporary Islamic monetary system is heavily influenced by conventional eco-

The lack of understanding and confusion about Islamic economics in general,

The Dress of the Countrywomen (Arabs—

Over the whole of Tunisia the countrywomen, whether Arab or

The information adjoined regarding the number of souls included in

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