In this Special Issue of the Journal of Economic Cooperation and Development – March 2016 - I have the privilege to present you with the theme ‘Banking and Finance’. The process of any contemporary economic system is based on money, finance and banking, all of which are instrumental for the level of production and consumption activities as well as for other financial operations within and across countries. The nature and role of finance and banking boom the financial market and increase the magnitudes of production and consumption activities by allowing credits, yet considering the notion of Islamic banking from a global micro- economic perspective.

This March issue contains six remarkable articles which shed light on themes related to Islamic financial contracts, financial crisis in emerging countries, efficiency in the banking sector, Islamic banking and economic growth, emerging housing markets and financial deepening.

The first article examines and explores whether the understanding of Gharar, a strictly prohibited element in Islamic financial contracts and transactions, is in line with the Qur’anic teachings. It also tries to examine a new understanding of gharar against misrepresentation and fraud, which is fundamentally different from the conventional interpretation.

The second article analyses the factors associated with the emergence of financial crisis in BRIC countries during 1992-2011 and compares the importance and significance of all variables in the model in which the domestic credit to private sector (% of GDP, domestic credit growth), Inflation, freedom, interest rate and economic growth were discovered to be the most significant variables in this model, while the deposit insurance rate was found to be the least significant variable in explaining the crisis.

The third article examines the weak-form market efficiency of the Malaysian commercial banks over the period of 17 October 1994 to 23 May 2014 by applying powerful panel stationarity tests that allow for the presence of multiple structural breaks and exploit the cross-section variation of the bank prices series.

The fourth article investigates the impact of Islamic banking variables on economic growth in a panel setting for 14 member countries of the Organisation of Islamic Countries (OIC) between 1999 and 2011 by employing the Panel VAR method to examine the short-run effects as well as long-run effects. As a result, shocks in Islamic banking contribute to more than 3% of the forecast error in economic growth in the next 10 year period.

The fifth article searches for a link between house prices, broad money, private credit and the macro-economy among 19 emerging markets and explains which variables predict the emerging markets house price index returns. The article also investigates the relationship among variables as well as the direction of the relationship and how house prices significantly affect the future broad money, private credit and macro variables.

The sixth and last article focuses on the exploration of the causal link between the degree of financial deepening and economic growth in Bosnia and Herzegovina (B&H) by employing ARDL cointegration estimation methodology. It also touches upon the behaviour of economic growth which was strongly influenced by the quality of the financial sector environment and aid effectiveness over the sample period.

Amb. Musa KULAKLIKAYA
Editor-in-chief

Articles of the Journal of Economic Cooperation and Development, Vol.37 No.1 (2016)