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Interest and the Modern Economy

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  • Zaman, Arshad
  • Zaman, Asad

Abstract

The argument that modern economies cannot function without interest is examined in detail. We show that Islamic alternatives to interest, which vary with the context and the type of loan, provide adequate substitutes. Interest based institutions lead to many types of difficulties both practical and theoretical. Islamic alternatives provide solutions to these difficulties.

Suggested Citation

  • Zaman, Arshad & Zaman, Asad, 2000. "Interest and the Modern Economy," MPRA Paper 9944, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:9944
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    References listed on IDEAS

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    1. Satya R. Chakravarty, 2003. "A Generalized Human Development Index," Review of Development Economics, Wiley Blackwell, vol. 7(1), pages 99-114, February.
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    7. Mohsin S. Khan, 1986. "Islamic Interest-Free Banking: A Theoretical Analysis (Le système bancaire islamique: analyse théorique d'un système qui ne fait pas appel à l'intérêt) (La prohibición islámica de los intereses," IMF Staff Papers, Palgrave Macmillan, vol. 33(1), pages 1-27, March.
    8. Mozaffar Qizilbash, 1996. "Capabilities, well-being and human development: A survey," Journal of Development Studies, Taylor & Francis Journals, vol. 33(2), pages 143-162.
    9. A. Geske Dijkstra & Lucia Hanmer, 2000. "Measuring Socio-Economic GENDER Inequality: Toward an Alternative to the UNDP Gender-Related Development Index," Feminist Economics, Taylor & Francis Journals, vol. 6(2), pages 41-75.
    10. Mohsin S. Khan & Abbas Mirakhor, 1989. "The Financial System and Monetary Policy in an Islamic Economy النظام المالي والسياسة النقدية في اقتصاد إسلامي," Journal of King Abdulaziz University: Islamic Economics, King Abdulaziz University, Islamic Economics Institute., vol. 1(1), pages 39-57, January.
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    Cited by:

    1. Mohammad Aslam & Toseef Azid & Shahnawaz Malik, 2000. "Attitude towards Interest-free Financing among Small Traders and Farmers in Multan," The Pakistan Development Review, Pakistan Institute of Development Economics, vol. 39(4), pages 663-672.
    2. Shaikh, Salman, 2012. "Interest Based Financial Intermediation: Analysis and Solutions," MPRA Paper 42500, University Library of Munich, Germany.

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    More about this item

    Keywords

    interest; riba; Islamic economics; prohibition of interest; profit sharing; Ricardian equivalence; Modigliani Miller Theorem;
    All these keywords.

    JEL classification:

    • B59 - Schools of Economic Thought and Methodology - - Current Heterodox Approaches - - - Other

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