Document Type : Science - Research (Islamic Banking)

Authors

• Meisam Karimi ¹
• Mohammad Sadegh Khorami ²

¹ Ph.D. Candidate of Financial Management, Imam Sadiq University, Tehran, Iran

² B.A. Student of Islamic Studies and Financial Management, Imam Sadiq University, Tehran, Iran.

Abstract

Transition from conventional (interest-based) to usury-free banking system by eliminating interest rates and replacing them with profit rates as a key variable in the money market is among the fundamental shifts in Iran's economy since the victory of the Islamic Revolution. Deposit rates have faced many operational challenges in practice during the enforcement of usury-free banking law. In this study, after reviewing library resources and analyzing interviews with experts, the factors that led to these challenges have been identified and each conceptually validated within six areas of policy-making, depositors, market structure, bank activity(performance), macroeconomics and supervision and punishment using the partial least squares method (PLS). Finally, a number of seventeen challenges were acknowledged as factors affecting profit-rate inefficiency. At the end, appropriate solutions for each of profit-rate challenges were presented after their being reviewed and confirmed in the focus research group consisting of some banking and finance university professors.

Keywords

• Interest Rate
• Resilience Economy
• Resilient Banking Sector
• Central Bank
• Money Market. JEL Classification: E42
• E44
• E50
• E59