Author Archives

Salman Ahmed Shaikh

PhD Economics, National University of Malaysia. Author, Researcher, Teacher and Consultant. He can be contacted at:

Consumption Smoothing – An Islamic Economics Perspective

It is an empirical observation that people desire to have smooth consumption throughout their lifetimes. Lifecycle consumption hypothesis (LCH) and permanent income hypothesis (PIH) try to explain that in micro-founded framework. Both negate the Keynes assertion that average propensity to consume (APC) falls as income rises. Some micro-economic evidence is also broadly consistent with LCH and PIH, at least in advanced economies.

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Resource Economics: Islamic Perspective

Islamic injunctions put huge emphasis on making best use of the resources provided by Allah. Cultivating barren land and dignity of labor is given significant value and regarded as virtues. In an Islamic economic framework, the demand for economic resources, i.e. land, labor and capital is driven by the interest free and productive asset/activity based voluntary exchanges in a market economy.

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Production Function in an Islamic Economic Framework

With higher levels of investment, circulation of wealth and competitive markets, innovation and quality enhancement will be the only means of sustaining the edge for firms in an Islamic economic framework. Hence, there will be more focus on innovation, customer satisfaction and hence speed of innovation and productivity is expected to increase. The supply side of innovation, which is the human capital, will also be incentivized through employment creation as a result of removing concentration and idleness of wealth.

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Risk Management with Islamic Derivatives: Do We Really Need Them

Islamic finance industry assets are now worth more than $2.6 trillion by 2019. The industry has shown resilience and double digit growth even in the face of global economic slowdown. After substantial double digit growth in assets, customer base and profits, Islamic banks are expected to embrace the vision to provide an egalitarian financial system which is inclusive for all and avoid the pitfalls which the conventional banking based on interest could not avoid.

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