Abstract
This study is concerned with consumers in the traditional sector of Iran who are highly influenced by Islamic rules and regulations, especially those prohibiting the charging of interest on loans. This constraint has been incorporated into the analysis of the demand for consumer durables to explore the implications of Islamic rules upon consumer behavior. Since intertemporal allocation presupposes the ability of consumers to transfer unearned income from the future to the present and vice-versa, at every moment in time there exists an excess demand for funds (in excess of earned income) on the part of some consumers. A model has been developed in this study to incorporate the means of financing these excess demands. This becomes relevant in a country like Iran where there is no organized bond market to meet the demand for loans while obeying the Islamic injunctions. The model shows that members of families form Family Financial Cooperatives (FFC) in which loans are customarily financed by voluntary participation of members whose earnings for some period exceed their consumption for the same period. In the model, each member is endowed with an income stream and each is assumed to maximize his intertemporal utility function. The excess of income over the consumption level makes up the "loanable fund," and as such it makes it convenient for Persian consumers to acquire more goods than their current incomes allow. The purpose of this research is to explain the structure and operation of the FFC and to show how it is a rational response to the intertemporal allocation problem.
Toutounchian, Iraj (1977). Consumer durables, investment, and financial cooperatives in the Islamic framework. Texas A&M University. Texas A&M University. Libraries. Available electronically from
https : / /hdl .handle .net /1969 .1 /DISSERTATIONS -363455.