Riba, Bank Interest and the Rationale of Its Prohibition

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FOREWORD PREFACE INTRODUCTION Tawheed ECONOMY WITHOUT INTEREST Liability Side of an Islamic Bank Capital Protection Assets of an Islamic Bank Sharing Based Modes of Finance Trade Based Modes of Financing Murabahah The Problem of Default Other Asset Based Instruments Islamic Banking in the Private Sector Non Bank Islamic Financial Institutions Islamic Insurance/Takaful Companies Stocks, Options, Derivatives and Risk Management Islamic Finance Under State Sponsorship Islamic Banking and Finance in South East Asia Islamic Finance in Sudan Iran, Turkey Pakistan, Bangladesh The Islamic Development Bank Islamic Finance and International Finance ECONOMICS OF ISLAMIC FINANCE Relative Stability of Islamic Financial System Absorption of Real Shocks Stability in the Monetary Sector Exogenous Sources of Instability Relative Stability with Fixed Liabilities Limited Scope of Speculation in an Islamic Financial System Relative Efficiency of an Islamic Financial System Uncertainty and Efficiency Meeting Uncertainty Comparative Advantage Fairness of the Islamic Financial System Sharing Enhances Equity Growth with Islamic Finance MEETING SPECIAL NEEDS Consumer Finance Islamic Modes of House Finance Credit Cards Financing Agriculture Government Finance Deficit Financing Muslim Minorities and Islamic Finance Regulation and Governance Inflation Indexation CONCLUSIONS AND PROSPECTS INDEX INTRODUCTION WHY THIS BOOK? ISLAM AND ITS LAWS Tawheed Justice and Equity The Individual Role of the State History Justice in Finance Islamic Rules for Exchange Conclusions Quran on Riba The Riba Owed to Abbas Reason of Prohibition Profits Versus Interest The Issue of Bank Interest Arguments for Bank Interest Conclusions Liability Side of an Islamic Bank Capital Protection Assets of an Islamic Bank Sharing Based Modes of Finance Trade-Based Modes of Financing Murabahah The Problem of Default Other Asset Based Instruments Islamic Banking in the Private Sector Non Bank Islamic Financial Institutions Islamic Investment Companies Islamic Mutual Funds Islamic Insurance/Takaful Companies Stocks, Options, Derivatives and Risk Management Islamic Finance under State Sponsorship Islamic Banking and Finance in South East Asia Islamic Finance in Sudan Iran, Turkey Pakistan, Bangladesh The Islamic Development Bank Islamic Finance and International Finance Conclusions Relative Stability of Islamic Financial System Absorption of Real Shocks Stability in the Monetary Sector Exogenous Sources of Instability Relative Stability with Fixed Liabilities Limited Scope of Speculation in an Islamic Financial System Relative Efficiency of an Islamic Financial System Uncertainty and Efficiency Meeting Uncertainty Comparative Advantage Fairness of the Islamic Financial System Sharing Enhances Equity Growth with Islamic Finance Conclusions CHAPTER 5 MEETING SPECIAL NEEDS Consumer Finance Islamic Modes of House Finance Credit Cards Financing Agriculture Government Finance Deficit Financing Muslim Minorities and Islamic Finance Conclusions Regulation and Governance Inflation Indexation Conclusions Future of Islamic Finance FOR ALLAH ALONE IS EVERLASTING EXISTENCE Assets Bank interest Bay‘al Dayn Bay‘al Wafa Collateral Commercial interest Consumer Contract Cost Cost plus Credit cards Credit sales Creditworthiness Crisis Currency Employment Exchange Fasad Financial lease Fulus Gharar House Finance Ihsan Ijara-wa-iqtina’ Investment Islamic banks Liabilities Liquidity Maqasid al-shariah Market Maslaha Musaqat Musharakah Muzara‘ah Price Rating agency Regulation Rent Rental Salam Saving Saving deposits Securitization Service charges Shahamah Shamam Shirkah Trade-based Wakalah