The thesis deals with usury and illegal lenders both on the domestic scene and abroad. The usury itself is defined by its characteristics, by adjudication and by historical connotations. The historical definition begins in Mesopotamia and ancient Rome, basically since the emergence of money. The...

In a world where the means of exchange is convertible into the numeraire consumption good at a fixed rate, no one wants to hold money over time - and due to convertibility there is no means by which the Friedman rule can generate deflation. This is the environment we study in this paper in order...

In a world where the means of exchange is convertible into the numeraire consumption good at a fixed rate, no one wants to hold money over time - and due to convertibility there is no means by which the Friedman rule can generate deflation. This is the environment we study in this paper in order...

I summarize the key points of the scholastic theory of usury following The Scholastic Analysis of Usury by John T. Noonan. Usury is the sin of taking interest on a loan without a just title. According to Scholastic moral theology, interest on loans may be justified by the extrinsic titles to...

Modern Muslim scholars prohibit riba or interest, but they prohibit it on the basis of wrong reasoning or interpretation of the texts. Their faulty reasoning has led to confusion and difficulties in the implementation of Islamic banking and finance. This paper points our that these scholars...

In the past, tomorrow and tomorrow, it seems that the practice of riba is not easy to eliminate immediately. This is because already used to practice usury is always a hope to achieve profit. The essence of the practice of usury is the exploitation of the rich (strong) on the weak in a way that...

Dr. Zarqa has tried to show in his article that "eliminating interest from the economy, which forms an integral part of the Islamic order, is not a romantic economic idea but a feasible and plausible proposition"

Dr. Nienhaus has with a straightforward analytical method sought to provide an insight into the functioning of Islamic banks (using PLS as the only financial instrument) in competition with interest-based banks. While the lucidity of the analysis is laudable, I have some reservations about the...

We begin by giving a summary of the main points. The book is chiefly concerned with prohibitory rules unanimously acknowledged in principle by all Muslims i.e. riba (unlawful advantage by way of excess or deferment) and gharar (uncertainty, risk and speculation). It is also concerned with...

There is a vast literature on regulatory, monetary and institutional aspects of traditional banking system. This is not true for the interest-free Islamic banking framework. In this paper, the functions and tools of central banking in an Islamic framework are evaluated, and suggestions for...

Islamic financial facilities like profit and loss sharing (PLS) are flexible enough to provide built-in stabilizers to the investment process. The amplitude of all phases of the business cycle will be smaller in an Islamic economy compared to advanced capitalist economies where the fixity of the...

Dr. Nienhaus notes that whereas the bulk of the literature on Islamic interest-free banking assumes an economy from which interest has been completely abolished, existing Islamic banks have actually to operate in an interest-based system in competition with interest-based banks. This being the...

In many books on Islamic economics and banking published during the 1960s and early 1970s, Islamic banks are interpreted as financial institutions which base their whole "loan" business on the principle of Profit and Loss Sharing (PLS) with the entrepreneurial partners. The authors of these...

This paper finds that the dividend signaling hypothesis is able to explain the phenomenon of asset concentration in short- and medium-term investments in the Islamic interest-free banking system. To maintain a stable dividend payout, managers of Islamic banks will prefer to invest in instruments...

This book is of uneven merit. It contains a fairly good account of the attitudes towards the institution of interest through the ages. It also contains a fairly elaborate critique of the various theories of interest which have sought to justify a return on capital in the form of interest....

Twenty years after the Dubai Islamic Bank and the Islamic Development Bank, Jeddah, were launched as modern banking institutions working on an interest-free basis, a stock taking is due. The book under review though written as a Ph. D. thesis at Stockholm University, Department of Business...

The book is made up of an introduction, a conclusion and eight chapters. The first chapter deals with the historical development of Islamic banking. The second chapter discusses the prohibition of riba in the Qur'an, Sunnah and Islamic law (fiqh). Chapter three deals with the modern...

Islamic banking and Finance (IBF) provides products and services guided by the Sharīʿah. Therefore, they are supposed to be different from their conventional counterparts. Islamic deposit rates should be different from conventional deposit rates. Islamic banking profit rates are supposedly...

A gradual convergence of Islamic finance towards interest-based conventional finance is one of the major concerns in the progress of Islamic finance. An important reason for this one-way convergence in the rates of returns of the two sectors is the dominance of Islamic banking in the composition...

This paper presents a historical investigation of usury in the context of the development of credit activities. The definition of usury and the attitudes towards usury changed multiple times over the centuries. We focus on the 12th to the 14th centuries and the changes in the operating, economic...

The rate of interest has been a highly complex and important phenomenon since long. For this reason, it has entered into all economics and related literature. For instance, though not an economist, Aristotle had a view on it and in fact considered it immoral. His reasoning was very simple:...

This paper finds that the dividend signaling hypothesis is able to explain the phenomenon of asset concentration in short- and medium-term investments in the Islamic interest-free banking system. To maintain a stable dividend payout, managers of Islamic banks will prefer to invest in instruments...

Rigorous mathematical techniques are used to compare the Islamic financial system based on variable return scheme (VRS) with the traditional one based on fixed return scheme (FRS). It is shown, under certain assumptions which include risk aversion on the part of investors, that the Pareto...

In recent years, there has been increased global awareness of Islamic finance. This topic is mainly opened with respect to the great financial crisis that mostly hit the banking system and the financial markets and caused many bank bankruptcies and state interventions. This paper analyzes the...

Banking sector is the backbone of any country׳s economy and bank deposits are the major tool of success for banking sector. Bank deposits are also a major part and determinant of country׳s saving. According to economic theories and practical considerations, interest rate is considered one of...

The main purpose of this paper is to present a theoretical model of an alternative fund-raising scheme for Muslim governments which are restricted by religious regulations against fixed-interest debt financing techniques. The proposed instrument is developed using the principles of a partial...

This paper investigate conditions under which equity funds can be sustainable source of budget deficit financing in an interest free economy. Our findings show equity fund can be sustainable source of deficit financing when the rate of return on equity fund exceeds the budget deficit expansion...

Background: Saving and investment are two of the most important tools for economic growth. The interest rate has always been considered an important determinant of saving and investment. However, according to Islamic teachings, riba or earning interest on saving or investment is forbidden, and...

In contrast to countries such as Malaysia, Singapore and the United Kingdom, Australia has reacted belatedly to the phenomenon that is Islamic Finance. Nevertheless, there is no evidence that the delay is the result of a deeper consideration of the issues. The terms of reference provided to the...

Islamic teachings are strictly against Riba (i.e. interest) because it involves exploitation. At present, Islamic banks, which claim to be interest-free financial institutions, are facing severe criticism for using Islamic tags for the similar products and services offered by the conventional...

Usurers have been the first step to financial intermediation. Standing as financial intermediaries, they were carrying out the high risk not to be refunded the money granted as loans. But this high risk has always been remunerated by a high interest rate on loans granted. Banks institutions, as...

Prohibitions of interest and interest based income, proscribed by the Shariah law, have forced the Islamic banks and other financial institutions to develop special models of financing. Author examines the legal nature of various financial arrangements offered by the Islamic banks which could be...