This paper studies the implications of foreign currency deposits (FCDs) for international liquidity shortages in Pakistan. The analysis focuses on how the large volume of FCDs and the specific institutional characteristics of those deposits have made the Pakistan economy highly vulnerable to...

This study was prepared by Zubair Iqbal of the Middle Eastern Department and Abbas Mirakhor of the Research Department. To collect information and views for the study, the authors held discussions with the authorities and representatives of commercial banks in the Islamic Republic of Iran and in...

With cross-section data from 53 emerging and mature markets, we provide evidence that equity premium puzzle is a global phenomenon. In addition to risk aversion, equity premium may reflect ambiguity aversion. We explore the sources of equity premium using some pertinent fundamental independent...

Islamic banks are prohibited from charging or paying interest, and thus can operate only on the basis of profit-sharing arrangements. This paper provides a brief survey of the theory and practice of Islamic banking. It covers developments in Islamic banking since the mid-1970s, how such banks...

This paper attempts to present a viable approach for the design of an instrument of government finance (and monetary management) in an Islamic economy where conventional transactions based on an ex-ante promise of a risk-free rate of return are forbidden. Resources to finance government...

The paper discusses the design of an efficient and optimal corporate governance structure of a firm within Islamic economic system. The objective of this paper is to identify factors, which will influence corporate governance within an Islamic economic system and to examine if corporate...

This paper discusses the instruments of monetary control in a marketoriented Islamic financial system, highlighting the relative advantages of indirect instruments. In this context, it proposes equity-based government securities with rates of return based on budgetary surplus. Such rates are...

It has been contended that Islamic banks and financial institutions continue to use the interest rate mechanism as a benchmark for procurement and placement of funds because in the absence of an interest rate mechanism there is no benchmark against which the cost of capital can be measured and...