Issues in Islamic Finance

The analysis presented here argues that the problems afflicting present-day economies arise primarily from the use of interest-based banking. In contrast to the teaching of mainstream economic theory, interest as an incentive for ensuring an efficient allocation of resources simply does not, and cannot, achieve results that are in any way comparable to those that may be achieved when profit is used for the purpose. Significant differences exist between profit and interest as motives for the efficient allocation of capital. These difference have important consequences not just on how resources are allocated, but also on how the rewards of productive activity are distributed.

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Issues in Islamic and Conventional Finance