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Domestic borrowing without the rate of interest: gharar and the origins of sukuk


  • Cizakca, Murat


All 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.

Suggested Citation

  • Cizakca, Murat, 2010. "Domestic borrowing without the rate of interest: gharar and the origins of sukuk," MPRA Paper 23205, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:23205

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    References listed on IDEAS

    1. Hicks, J. R., 1969. "A Theory of Economic History," OUP Catalogue, Oxford University Press, number 9780198811633.
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    Cited by:

    1. Waemustafa, Waeibrorheem & Sukri, Suriani, 2015. "Theory of Gharar and its interpretation of Risk and Uncertainty from the perspectives of Authentic Hadith and the Holy Quran: A Qualitative Analysis," MPRA Paper 78316, University Library of Munich, Germany, revised 10 Jan 2016.

    More about this item


    gharar; domestic borrowing; public borrowing; sukuk; esham; cash waqfs;

    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; Stockholm School

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