Islamic Banking Contracts’ Impact on the Unemployment Rate in Iran; an Examination
Document Type : Original Article
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Abstract
In the Islamic (Riba-free) banking system, resources allocation is done via Islamic contracts. By these contracts, the banks provide the customers with the facilities they need in the framework of Islamic contracts. Our main goal, here, is to examine Islamic contracts’ impact on the unemployment rate in the Iranian economy. Thus, applying the bounds testing and autoregressive distributed lag modeling (ARDL) approaches, we have used season data for the years 1379-1392. The results show that among the Islamic contracts, only the growth rate of exchange contracts’ reserve has a negative effect on the unemployment rate. In other words, as the exchange contracts increase, the unemployment rate in the Iranian economy decreases, while the growth rate of Musharakah and Qard-ul-hasanah contracts’ reserve have a positive effect. The model’s estimated error correction coefficient shows that 36 percent of the imbalance of the unemployment rate will be adjusted in the next period.
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