Financing Economic Growth in Emerging Economies: A Theoretical Approach (original) (raw)

2017

Abstract

As a result of differentiation in the financial sector in some parts of the world, particularly the Muslim world with the rise of IF in the 1970s, a two-dimensional financial system known as dual banking emerged. The conventional financial (CF) system constituted the vast majority of the financial sector in the whole world; however, IF has grown dramatically in the last decades, becoming an alternative financing model. Despite the differences between the two models, the main goal in both systems is to serve as mediators for fund suppliers and fund receivers. CF is an interest -based system and is able to fund all sectors of the economy, while IF institutions, on the other hand, have to comply with secular and Islamic legal rules.

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