International Journal of Advanced Engineering Research and Science (IJAERS) [Vol-6, Issue-10, Oct- 2019]

https://dx.doi.org/10.22161/ijaers.610.6 ISSN: 2349-6495(P) | 2456-1908(O)

The demand of money in Islamic context

Zouhair LAKHYAR¹, Mouttaki HLAL²
¹Professor of Economics at the Faculty of Legal, Economic and Social Sciences of Mohammedia, Morocco
²Professor of Mathematics at the Faculty of Legal, Economic and Social Sciences of Mohammedia, Morocco

Abstract— The demand for money differs in its conception, from one economic thought to another, the object of
this article is to model this demand for money in an aspect that has practically not been made to know a
modeling of the money demand and its balance with the money supply but under the Islamic context.
Keywords— Economic, Demand, Model, Money, Islamic.

I. INTRODUCTION In other hand if the investment capital is subject to the≪

This paper will focus on the determination of the 𝑍𝑎𝑘𝑎𝑡 ≫, it must be siliced from the profit then
macroeconomic balance in the money market but in an 𝑀𝐺𝑑 = 𝜶𝟎 + 𝜶𝟏 R+𝜶𝟐 𝐑 + 𝜶𝟑 π -𝜶𝟑 𝒁
Islamic context, in other words we will try to answer the 𝑀𝐺𝑑 then we have 𝑍 = 𝑧𝑅 , so the global demand of money
following question: is an economy governed by the Islamic become
religion can settle in economic equilibrium? 𝑀𝐺𝑑 = 𝜶𝟎 + 𝜶𝟏 R+𝜶𝟐 𝐑 + 𝜶𝟑 π -𝜶𝟑 𝒛𝑹
Thus
II. THE MONEY DEMAND 𝑀𝐺𝑑 = 𝜶𝟎 + (𝜶𝟏 + 𝜶𝟐 − 𝜶𝟑 𝒛)𝐑 + 𝜶𝟑 π
2.1: The money demand without speculation At the equilibrium we have
If we denote by 𝑀𝑇𝑑 = 𝑓(𝑅) 𝑀𝐺𝑑 =𝑀 𝑆
𝑀𝑇𝑑 = 𝜶𝟎 + 𝜶𝟏 R In particular cases when R=0, we have
With; 𝑀𝑇𝑑 is the money for transactions 𝑀 𝑆 = 𝜶𝟎 + 𝜶𝟑 π
α𝟎 is the money for minimal transactions And if = 𝟎 , we have
α𝟏 is the part of money for transactions 𝑀 𝑆 = 𝜶𝟎 + (𝜶𝟏 + 𝜶𝟐 – 𝜶𝟑 𝒛)𝐑
In addition let 𝑀𝑝𝑑 is the money quantity for precaution, The last equilibrium illustrate the Islamic liquidity of
then we have𝑀𝑇𝑑 = 𝜶𝟐 R , money curve ( ILM curve ).
α𝟐 is the share of money demand for precaution
Finally a money for investment denoted by𝑀𝐼𝑑 then𝑀𝐼𝑑 = III. THE DEMAND OF MONEY WITH
𝜶𝟑 π SPECULATION
Where π is the profit, and its well known that investment In the second part of this paper we consider an approach
depends on profit (𝜶𝟑 is the part of profit). The global with speculation.
demand of money in an Islamic context 𝑀𝐺𝑑 is determined Consider 𝑀𝑇𝑑 = 𝑓(𝑅) , the money demand for transactions
by the equality𝑀𝐺𝑑 = 𝑀𝑇𝑑 + 𝑀𝑃𝑑 + 𝑀𝐼𝑑 and 𝑀𝑅𝑑 = 𝑓(𝑅, 𝑟) the money demand of reserve,
Which implies the linear equation where 𝑟 is the income of whatever participation because in
𝑀𝐺𝑑 = 𝜶𝟎 + 𝜶𝟏 R+𝜶𝟐 𝐑 + 𝜶𝟑 π Islam the interest is prohibited. If we denote by 𝑀𝑆𝑑 =𝑓(𝑟)
=𝜶𝟎 + (𝜶𝟏 +𝜶𝟐 )𝐑 + 𝜶𝟑 π the demand of money for speculation, then the global
Let 𝑀 𝑆 the money supply, since at the equilibrium we demand of money is obtained by
have equality
𝑀𝐺𝑑 = 𝑀 𝑆 then 𝑀𝐺𝑑 = 𝑀𝑇𝑑 + 𝑀𝑅𝑑 + 𝑀𝑆𝑑
𝑀 𝑆 =𝜶𝟎 + (𝜶𝟏 +𝜶𝟐 )𝐑 + 𝜶𝟑 π
In particular, 𝑖𝑓 𝑅 = 0 we have IV. EQUILIBRIUM
𝑀 𝑆 = 𝜶𝟎 + 𝜶𝟑 𝛑 At the equilibrium we have 𝑀𝐺𝑑 = 𝑀 𝑆 then we see that
If we have π =0, then 𝑀 𝑆 = φR − μr
𝑀 𝑆 =𝜶𝟎 + (𝜶𝟏 +𝜶𝟐 )𝐑 Hence
These points ( 𝑅 = 0 𝑎𝑛𝑑π =0 ) described the (Islamic 𝑀 𝑆 − φR − μr = 0
liquidity of money curve,the ILM curve). In this case we have
2.2: The demand of money and Zakat ∗
𝑀 𝑆 − μr
𝑅𝐼𝐿𝑀 =
φ

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International Journal of Advanced Engineering Research and Science (IJAERS) [Vol-6, Issue-10, Oct- 2019]
https://dx.doi.org/10.22161/ijaers.610.6 ISSN: 2349-6495(P) | 2456-1908(O)

In particular if:
∗ 𝑀𝑆
r=0, 𝑅𝐼𝐿𝑀 = and
φ
∗ 𝑀𝑆
if𝑅𝐼𝐿𝑀 = 0, we have 𝑟 = − .
μ

V. CONCLUSION
To conclude, it is enough to answer the previous question
to say that in an Islamic context, the economy can settle in
equilibrium, but under conditions

REFERENCES
[1] J. F. GOUX(2018), « MONETARY AND FINANCIAL
ECONOMY. Theories, institutions, policies » 3rd edition,
Edition Economica.
[2] T. Guggenheim (1978). « Preclassical monetary theories »
Collection, Social Science works , Éd. Librairie Droz
[3] P. Maurice (1964), « Note on Milton Friedman's Monetary
Theory » Revue economic Année 1964 15-5 pp. 677-712
[4] M. Falise (1955). Theoretical approaches to the demand for
money. Bulletin of the Institute of Economic and Social
Research , 21e Année, No. 5 (août 1955), pp. 553-596

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