Implications of Alternative Banking Systems

34 Pages Posted: 5 Dec 2012

See all articles by Saran Sarntisart

Saran Sarntisart

Australian National University (ANU)

Cagri S. Kumru

Australian National University (ANU)

Date Written: December 6, 2012

Abstract

A significant number of individuals are unwilling to deposit their savings into the banking sector since it does not operate according to their religious beliefs. In this paper we provide a model that aims to answer the following questions: First, under what conditions an alternative banking system would arise? Second, what are the growth, and welfare implications of these banking systems? Our model shows that an alternative banking system would arise if individuals have religious concerns. Moreover, we show that in an economy populated with a certain number of religiously concerned individuals, the existence of an alternative baking system can generate relatively higher growth and improve welfare.

Keywords: banking, growth, welfare

JEL Classification: E21, E62, H55

Suggested Citation

Sarntisart, Saran and Kumru, Cagri S., Implications of Alternative Banking Systems (December 6, 2012). Proceedings of World Business and Economics Research Conference 2012 , Available at SSRN: https://ssrn.com/abstract=2185431 or http://dx.doi.org/10.2139/ssrn.2185431

Saran Sarntisart (Contact Author)

Australian National University (ANU) ( email )

Canberra, Australian Capital Territory 2601
Australia

Cagri S. Kumru

Australian National University (ANU) ( email )

Canberra, Australian Capital Territory 2601
Australia

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