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An Analytical Review of Different Concepts of Riba (Interest) in the Sub-Continent

Author

Listed:
  • Aziz, Farooq
  • Mahmud, Muhammad
  • Karim, Emadul

Abstract

The traditional concept of Riba (interest) is an excess amount on loan, which creditor receives from debtor on the repayment of loan. There is almost a consensus on the sprit of this concept that it is traditional thought or school; but along with that some other point of views also exist, which present Riba, in somewhat different ways, will be termed as non-traditional approach in this paper. Both of these schools are agreed on the point that, Riba is just restricted to debt, and the increment on it is Riba; but the main difference among these is that: former approach claims that, each and every addition on loan, regardless of purpose and time duration of loan is Riba; but, the later approach demand’s some room for that on different grounds. Actually both of them do not have any sound base. When the concept of unearned income (the income, which is not the result of human labor), is a recognized fact in Islamic economics in different forms, like: ijara (rent), Mudoraba and Mazara’a (Share Cropping); then definitely no logical reason is left to avoid excess income on loan. Both approaches are just unable to give a concrete concept of Riba.

Suggested Citation

  • Aziz, Farooq & Mahmud, Muhammad & Karim, Emadul, 2008. "An Analytical Review of Different Concepts of Riba (Interest) in the Sub-Continent," MPRA Paper 15455, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:15455
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    File URL: https://mpra.ub.uni-muenchen.de/15455/1/MPRA_paper_15455.pdf
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    More about this item

    Keywords

    Riba; Interest; Rent; Share Cropping;

    JEL classification:

    • E43 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Interest Rates: Determination, Term Structure, and Effects
    • E51 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Money Supply; Credit; Money Multipliers
    • P45 - Economic Systems - - Other Economic Systems - - - International Linkages
    • P59 - Economic Systems - - Comparative Economic Systems - - - Other
    • P52 - Economic Systems - - Comparative Economic Systems - - - Comparative Studies of Particular Economies

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