Optimal Interest Rate in Usury-free Banking in Iran: Analysis and Critique of Interest Rate Theories

Determining the optimal bank interest rate in the country's economy is an important issue upon which the country's thinkers have not yet reached a general consensus due to the multiplicity of economic, political, monetary and financial variables. Thinkers and researchers of Islamic economics, considering the differences in legal and economic aspects as well as the observance of religious aspects of the method of determining the optimal interest rate from the perspective of Islamic economics with conventional economics, have announced diverse theories. These patterns and theories, while revealing the significance and sensitivity of determining interest rates in the Usury-free banking system, also indicate that a coherent framework and a comprehensive theory for determining interest rates in the Islamic society of Iran has not been established. Moreover, no specific operational pattern is observed for determining interest rates in the theories. The present study attempts to clarify the fiqhi, legal, and economic criteria and indices of determining the optimal interest rate, and then taking advantage of such criteria, it investigates and assesses the opinions and finally introduces an alternative solution. The results indicate that, firstly, the strategies and theories expressed are generally not comprehensive, nor are they complete, and they do not have maximum compatibility with Islamic criteria. Secondly, the regular interest rate, inspired by the Taylor rule, can be a very suitable method for determining the interest rate in the Iranian economy, in which all the jurisprudential, legal and religious criteria have been observed and enjoys more comprehensiveness than the other methods