Domestic borrowing without the rate of interest: gharar and the origins of sukuk
AbstractAll governments need to borrow from the public. Known as domestic borrowing, this is not an easy process. For Muslim countries, where interest is prohibited, this process becomes extra ordinarily difficult. I will start this article by examining the concept of uncertainty, gharar, in Islam and then move on to the origins of Islamic domestic borrowing, which is referred to in modern parlance as sukuk. The value of modern sukuk issued at the end of 2009 has reached roughly USD 100 billions. While most people think that this is a newly invented instrument, the institutional roots can be traced back for centuries.
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Bibliographic InfoPaper provided by University Library of Munich, Germany in its series MPRA Paper with number 23205.
Date of creation: 03 May 2010
Date of revision:
gharar; domestic borrowing; public borrowing; sukuk; esham; cash waqfs;
Find related papers by JEL classification:
- N00 - Economic History - - General - - - General
- N25 - Economic History - - Financial Markets and Institutions - - - Asia including Middle East
- B25 - Schools of Economic Thought and Methodology - - History of Economic Thought since 1925 - - - Historical; Institutional; Evolutionary; Austrian
This paper has been announced in the following NEP Reports:
- NEP-ALL-2010-06-18 (All new papers)
- NEP-ARA-2010-06-18 (MENA - Middle East & North Africa)
- NEP-CWA-2010-06-18 (Central & Western Asia)
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- Hicks, J. R., 1969. "A Theory of Economic History," OUP Catalogue, Oxford University Press, number 9780198811633.
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