Last global financial crisis, as well as any crisis, testifies imperfections of former model of development of economy and financial sector in particular. It forces to look in a new way and reconsider principles of functioning of the financial system. In article imperfections of the financial...

The paper demonstrates the allocation of risk in Islamic banking and shows that in Islamic banking as risks are carried by the owner of funds and are not transmitted to other counterpart, large part of risks are born by depositors that makes financial system more stable. Paper also demonstrates...

The paper argues that the possibility of demand-led and supply-led growth models to ensure economic growth is limited and states the feasibility of shifting toward an efficiency-based development model. In particular, monetary policy should aim at increasing efficiency in the real sector. For...

Most of central banks are responsible for single inflation goal, some central banks (for example FRS) fulfill dual mandate of maximum employment and price stability. Paper argues that the best way to promote sustainable economic growth and at the same time to contribute to low inflation and full...

Debt can increase economic growth as it allows the households and firms to increase consumption and investment. However, high reliance on debt adversely affects economy as it can cause debt-deflationary recession, balance sheet recession, cyclical fluctuations in economy and decrease in...

As uncertainty always exists, money hoarding that negatively affects economic activity cannot be completely eliminated, it can only be diminished. The paper argues that the scale of money hoarding varies depending on the type of the financial system, and it is asserted that 1) in the debt-based...

Despite the key role an increase in production efficiency plays in improving the competitiveness of the economy, the efficiency of production is not reflected in the objectives of monetary policy. The paper investigates the impact of the interest rate on firms’ efficiency and argues that it is...

The paper argues that inequality is due to a difference in profitability of firm, and the larger the difference in profitability between high profitable and low profitable firms, the lower the innovation activity. It is also claimed that at low inequality an increase in inequality slightly...