Abstract
This paper examines the empirical
works that link between the financial designs and economic development. The
permissible scope of activities for banks and other financial intermediaries,
however, are determined by the regulation dictating the structure of the
banking industries, the financial products and services the intermediaries
offer and the information disclosure requirements in the financial market. These aspects clarify the exogenous
instruments that can be used to influence financial system design. These
designs in return influence the choice of financing and the capital structure
of the firm. Different financial system designs will manifest themselves in
different divisions of activities between financial institutions and
markets. What are those types of
Islamic financial designs? Why do we
care about Islamic financial systems designs?
JEL classification: G21; G28;
Keywords:
financial design; bank regulation; legal requirement; Islamic banks; capital
structure;
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