Can Islamic Finance Constitute A Solution to Crisis?



The aim of this paper is to show that the Islamic finance is more stable than the conventional finance constituting, thus, a means to reduce the impact of financial crises. Using a VAR model for the financial indexes of France, United States, Indonesia and Saudi Arabia, we show that the effect of a shock on the American market during the period of crisis is negatively transmitted on all other markets, but with a small extent on the market using the method of Islamic financing.

Full Text: PDF DOI: 10.5539/ijef.v3n3p75

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International Journal of Economics and Finance  ISSN  1916-971X (Print) ISSN  1916-9728 (Online)

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