Market for Lemons and Cigarettes: An Islamic Perspective on Market Failure and a Lesson for Eliminating Interest from Economy

M Fahim KHAN

Article Details

Market for Lemons and Cigarettes: An Islamic Perspective on Market Failure and a Lesson for Eliminating Interest from Economy

Authors:

M Fahim KHAN

Publisher:

Research Center for Islamic Economics (ikam)

Main Topics:

Sociology and anthropology

Journal:

Turkish Journal of Islamic Economics 2017 Vol.4 Issue 2, pp.1-18

Document Type:

Article

Publication Date:

8/2017

Document Language:

English

Document ID (Org No.):

2000840321

Frequency:

Bi-Annual

eISSN:

2148-3809

Abstract:

 


The existence of interest and interest based institution in a market economy is in fact a market failure which remains unrecognized even by such Nobel Laureates who have been awarded Nobel Prizes on their research on capital and financial markets. Just as the market of cigarettes is a failure of market to turn away the smokers from their killers, similar it is the failure of interest based financial market to turn away the finance seekers from their killers (providers of finance on interest).This market failure needs to be recognized and the solution for this failure should be found not by intervening in the market but should be found in human behavior. As putting filters on the cigarettes does not stop smokers from being killed and something is needed to change in the consumer behavior to make them turn away from their killer, similarly, correction is needed in the interest based lending and borrowing to turn them away from their killer, the interest based financial institutions.

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Article Details

Market for Lemons and Cigarettes: An Islamic Perspective on Market Failure and a Lesson for Eliminating Interest from Economy

Authors: M Fahim KHAN

Publisher: Research Center for Islamic Economics (ikam)

Main Topics: Sociology and anthropology

Journal: Turkish Journal of Islamic Economics 2017 Vol.4 Issue 2, pp.1-18

Document Type: Article

Publication Date: 8/2017

Document Language: English

Document ID (Org No.): 2000840321

Frequency: Bi-Annual

eISSN: 2148-3809

Issues

Authors:

M Fahim KHAN

Publisher:

Research Center for Islamic Economics (ikam)

Main Topics:

Sociology and anthropology

Journal:

Turkish Journal of Islamic Economics 2017 Vol.4 Issue 2, pp.1-18

Document Type:

Article

Publication Date:

8/2017

Document Language:

English

Document ID (Org No.):

2000840321

Frequency:

Bi-Annual

eISSN:

2148-3809