Investigating the Effect of Providing Banking Facilities within the Framework of Islamic Contracts on the Value Added of Economic Sectors: Application of the Bayesian Vector Autoregression Model (BVAR)

@Mohammad Nasr Esfahani / Instructor, Kharazmi Uni                       m.ghaemi@khu.ac.ir

Mehdi Ghaemi-Asl / Assistant Professor, Kharazmi Uni                   mnafr121@gmail.com

Ali Asghar Zare Kordiani / MA in Economics, Subdiscipline of Islamic Banking Kharazmi Uni
                                                                                          alizarek69@yahoo.com

Received: 2018/09/12 - Accepted: 2019/01/28

Abstract

In the interest- free banking system, Islamic contracts, due to their operational nature and interactivity with other economic sectors, can help guide and organize private sectors of the economy. This paper studies the effect of banking facilities within the framework of the Islamic contracts of Ju'alah, installment plan, legal partnerships, civil participation and Mudharabah on the value added of housing, industry and mining sectors. To this end, using the Bayesian vector autoregression model, the effect of banking facilities using the aforesaid contracts on the value added of the above mentioned sectors has been investigated by considering the variables of the general level of prices, exchange rate and oil revenue during the period of 1384-1394. Based on the results of the study, banking facilities did not have a significant impact on housing, industry and mining sectors within the framework of a legal partnership agreement; however, the facilities of Ju'alah, civil partnership, installment plan and Mudharabah had a positive and meaningful effect on all sectors of economy. The necessity of reforming the framework of legal participation facilities, strengthening of the facilities of Ju'alah and civil participation in housing, industry and mining sectors respectively, strengthening of Mudh arabah facilities and installment plans in these two sectors are among the implications and suggestions of this research.

Keywords: Banking contracts, Islamic banking, Islamic contracts, Value added of economic sectors, Bayesian vector autoregression model.

JEL: E5, E6, G2.