Swartz, N. P.

The Application of the Prohibition of Usury (Riba) in Islamic Finance and Banking Law: A Comparative Study

  • Year: 2013
  • ISBN: 978-99912-914-4-4
  • Format: 15 x 21 cm
  • Pages: 188
  • Binding: paperback
  • Price ex. VAT BWP: 200.00
  • Notice: Price subject to change.

Today's financial crisis does not arise solely from economic instability due to interest or acts of nature, but also from the very design of the financial markets themselves. The world needs new ways of looking at finance and financial risks. Islamic finance may make a valuable contribution to the international financial system, as it is based on the concept of participation. Entrepreneurs partner with their financiers to share a venture’s profits on an equitable basis. This leads to a broader and more equitable distribution of wealth, as well as lessening the burden of liabilities on financial institutions during times of crisis. The Islamic equity-based system does not mean that there will be no role for debt-based transactions. What it means is that debt will no longer remain a predominant source of finance as it is today. Debt will remain necessary for consumption requirements, and also for commercial needs. All these debts will be fully backed by real assets or commodities. Thus there will be no room for interest-based loans. Credit will be restricted to sales on the basis of deferred payment, and leases will generate rentals based of their actual usufruct.

The Application of the Prohibition of Usury (Riba) in Islamic Finance and Banking Law: A Comparative Study