International Conference on Eurasian Economies
29-31 August 2016 – Kaposvár, HUNGARY
Paper detail
Paper ID : 1788
Status : Paper published
Language : English
Topic : Finance and Financial Crises
Presenter: Dr. Jozsef Varga
Session : 5A Banking
The Comparative Analysis of the Alternative Crisis Management Models of the Islamic- and Christian-Based Bank System
The Comparative Analysis of the Alternative Crisis Management Models of the Islamic- and Christian-Based Bank System
- Dr. Balazs Cseh (University of Sopron, Hungary)
- Dr. Jozsef Varga (Kaposvar University, Hungary)
Abstract
There is an increasing demand for investments based on religious basics since these ethical investments mean much more stable financial chances. The economic and financial risk of a fragmented reserve banking system has become obvious by the failure of the neoliberal market economy. Therefore, world economy has to reform the entire credit and bank system that could only be achieved by alternative methods. The Islamic bank is a particularly young alternative opportunity that is based on more equitable and moral principles. However, bringing back the Christian-based banking system that looks back on old traditions and that became extinct could also be an alternative. One of the major principles of the Christian-based banking system is that it is not allowed to borrow and invest in worthless bonds without provision. For the Islamic bank, for instance, speculative affairs that are of high risk and monetary derivates are forbidden, there is voluntary risk management. Risk management and risk-sharing practices based on alternative religious principles will also be analyzed. Due to its procyclic-anticyclic characteristics, the traditional bank system deepens the crisis while the religious bank systems are against the crisis by alleviating the burdens of the debtor. The authors describe and analyze crisis management solutions with a sort of comparative method.
JEL codes: B26, B41, D63
Cseh, Balazs, Varga, Jozsef (2016). "The Comparative Analysis of the Alternative Crisis Management Models of the Islamic- and Christian-Based Bank System" in Proceedings of International Conference of Eurasian Economies 2016, pp.129-133, Kaposvár, HUNGARY.
DOI: https://doi.org/10.36880/C07.01788
